Transforming growth factor-β (TGF-β) regulates a wide variety of cellular processes including cell growth, apoptosis, differentiation, migration, and extracellular matrix production among others. The canonical signaling pathway induced by the TGF-β receptor complex involves the phosphorylation of Smad proteins which upon activation accumulate in the nucleus and regulate transcription. Interestingly, the cellular response to TGF-β can be extremely variable depending on the cell type and stimulation context. TGF-β causes epithelial cells to undergo growth arrest and apoptosis, responses which are critical to suppressing carcinogenesis, whereas it can also induce epithelial-mesenchymal transition and mediate fibroblast activation, responses implicated in promoting carcinogenesis and fibrotic diseases. However, TGF-β induces all these responses via the same receptor complex and Smad proteins. To address this apparent paradox, during the last few years a number of additional signaling pathways have been identified which potentially regulate the different cellular responses to TGF-β. The identification of these signaling pathways has shed light onto the mechanisms whereby Smad and non-Smad pathways collaborate to induce a particular cellular phenotype. In this article, we review TGF-β signaling in epithelial cells and fibroblasts with a focus on understanding the mechanisms of TGF-β versatility. J. Cell. Biochem. 102: 593–608, 2007. © 2007 Wiley-Liss, Inc.