Stromelysin gene expression is transcriptionally activated by a number of growth factors (e.g., EGF and PDGF), tumor promoters (e.g., TPA), and oncogenes (e.g., ras, src) through an AP-1-dependent mechanism. TGF-beta repression of stromelysin induction is mediated at the level of transcription by an element located at position -709 in the rat stromelysin promoter referred to as the TGF-beta inhibitory element (TIE). A TIE-binding protein complex is induced by treatment of rat fibroblasts with TGF-beta. This protein complex contains the protooncogene c-fos, and induction of c-fos by TGF-beta is required for the repressive effects of TGF-beta on stromelysin gene expression. Interestingly, c-fos induction is also required for stimulation of stromelysin expression by EGF in rat fibroblasts. Preliminary studies suggest that differential regulation of members of the jun family of early-response genes may explain this apparent paradox and determine whether stromelysin is induced or repressed by growth factors. TGF-beta stimulation therefore initiates a cascade of events that results in a specific pattern of gene expression: the direct stimulation of early-response genes can lead to subsequent induction or repression of other genes. Growth factor regulation of matrix metalloproteinases appears to play a role in embryonic development in the morphogenesis of the murine lung. Treatment of embryonic lungs in organ culture with the growth factors EGF or TGF-alpha results in stimulation of growth and inhibition of branching morphogenesis. A similar inhibition of branching was observed when these lung rudiments were treated with the matrix metalloproteinase collagenase. Most interestingly, the effects of EGF and TGF-alpha can be completely reversed by the tissue inhibitor of metalloproteinases, TIMP. TGF-beta has the opposite effect on growth of murine lung rudiments--growth is inhibited in a dose-dependent manner. This example illustrates a potential role for growth factor regulation of matrix-degrading metalloproteinases in complex developmental processes.