Abnormal accumulation of the amyloid-beta peptide (Abeta) in the brain appears crucial to pathogenesis in all forms of Alzheimer disease (AD), but the underlying mechanisms in the sporadic forms of AD remain unknown. Transforming growth factor beta1 (TGF-beta1), a key regulator of the brain's responses to injury and inflammation, has been implicated in Abeta deposition in vivo. Here we demonstrate that a modest increase in astroglial TGF-beta1 production in aged transgenic mice expressing the human beta-amyloid precursor protein (hAPP) results in a three-fold reduction in the number of parenchymal amyloid plaques, a 50% reduction in the overall Abeta load in the hippocampus and neocortex, and a decrease in the number of dystrophic neurites. In mice expressing hAPP and TGF-beta1, Abeta accumulated substantially in cerebral blood vessels, but not in parenchymal plaques. In human cases of AD, Abeta immunoreactivity associated with parenchymal plaques was inversely correlated with Abeta in blood vessels and cortical TGF-beta1 mRNA levels. The reduction of parenchymal plaques in hAPP/TGF-beta1 mice was associated with a strong activation of microglia and an increase in inflammatory mediators. Recombinant TGF-beta1 stimulated Abeta clearance in microglial cell cultures. These results demonstrate that TGF-beta1 is an important modifier of amyloid deposition in vivo and indicate that TGF-beta1 might promote microglial processes that inhibit the accumulation of Abeta in the brain parenchyma.