The expression of transforming growth factor beta (TGF-beta) was examined during the evolution of streptococcal cell wall (SCW)-induced hepatic granulomas in rats to evaluate the role of TGF-beta in chronic inflammation progressing to fibrosis. As determined by immunocytochemistry, Kupffer cells rapidly expressed TGF-beta 1 following intraperitoneal (i.p.) injection of SCW, and TGF-beta was expressed by mononuclear phagocytes in the earliest cell aggregates as well as by mononuclear phagocytes within the capsule of mature lesions. Interestingly, apparent extracellular TGF-beta was observed in mature lesions at the interface of the capsule and the cellular core, a region of active fibrogenesis. Granulomas isolated 3, 6, and 12 weeks post-SCW injection elaborated nanogram (ng) quantities of latent and active TGF-beta into culture supernatants, and expressed high levels of 2.4 and 1.9 kb TGF-beta 1 transcripts. Expression of procollagen type I and III mRNAs were observed in parallel with the expression of the TGF-beta 1 transcripts. Thus, TGF-beta is expressed throughout SCW-granuloma development, and, based on known bioactivities, it appears that TGF-beta mediates, in part, the recruitment and activation of monocytes and fibroblasts and deposition of collagen in SCW-granulomas and likely other chronic inflammatory lesions progressing to fibrosis.