Transforming growth factor beta 1 (TGF-beta 1) is known to inhibit hepatocyte growth in vitro and in vivo. In this study, we analyzed the effect of TGF-beta 1 on alpha-fetoprotein (AFP) and albumin gene expression in HuH-7 human hepatoma cells. TGF-beta 1 inhibited cell growth in a dose dependent manner. The cellular secretion rate of AFP but not albumin was suppressed significantly by TGF-beta 1. TGF-beta 1 caused a significant reduction in the level of AFP mRNA. In contrast, the levels of albumin mRNA or beta-actin mRNA were not changed by TGF-beta 1. In transient transfection experiments, TGF-beta 1 resulted in selective repression of AFP promoter activity. These results suggest that TGF-beta 1 is one of the key factors involved in the differential regulation of the AFP gene and the albumin gene.