The fusion of Abl with either Bcr or Tel in human leukaemia leads to the constitutive activation of Abl tyrosine kinase, which in turn induces growth-factor-independent proliferation and cell survival. However, the mechanism by which Bcr-Abl induces cellular transformation has not yet been well characterized. Here, we show that Bcr-Abl-expressing cells are resistant to growth inhibition and apoptosis mediated by transforming growth factor-beta (TGF-beta). Interestingly, we observed that the suppressive effects of Bcr-Abl on TGF-beta responses were not mediated by an impairment of Smad signalling, which is believed to act as the principal mediator of TGF-beta responses. In contrast, we found that Bcr-Abl can target the protein kinase AKT and the transcription factor Fox O3 to interfere with growth inhibition and apoptosis in response to TGF-beta. Our results show a novel mechanism of cellular transformation by the oncogenic fusion protein Bcr-Abl through suppression of the cytostatic actions of TGF-beta.