Both transforming growth factor-beta (TGF-beta)-induced expression of biglycan (BGN) and activation of p38 MAPK have been implicated in cellular adhesion and migration. Here, we analyzed the role of adhesive events and the small GTPase Rac1 in TGF-beta regulation of BGN. TGF-beta1 induction of BGN expression and activation of p38 was abolished or strongly reduced when cells were kept in suspension or exposed to either the actin cytoskeleton-disrupting agent cytochalasin D or a specific chemical Rac1 inhibitor. Ectopic expression of a dominant negative mutant (T17N) of Rac1 abrogated both TGF-beta-induced p38 MAPK activation and BGN up-regulation but did not affect TGF-beta-induced phosphorylation of Smad3 or transcriptional induction of Growth Arrest DNA Damage 45beta, previously shown to be crucial for TGF-beta regulation of BGN. Overexpression of wild type Rac1 greatly enhanced the TGF-beta effect on BGN in adherent cells, whereas ectopic expression of constitutively active Rac1 (Q61L) activated p38 and in the presence of exogenous TGF-beta was able to rescue BGN expression in nonadherent cells. Endogenous Rac1 was activated by TGF-beta treatment in PANC-1 cells in an adhesion-dependent fashion. Like Rac1-T17N, the NADPH oxidase inhibitor diphenylene iodonium and the tyrosine kinase inhibitor herbimycin A blocked TGF-beta-induced p38 activation and BGN expression, suggesting that Rac1 exerts its effect on BGN and p38 through increasing NADPH oxidase activity and subsequent production of reactive oxygen species. These results show that the TGF-beta effect on BGN is dependent on cell adhesion and that activated Rac1, presumably acting through NADPH oxidase(s), is necessary but not sufficient for TGF-beta-induced BGN expression.