Cancer arises from multiple genetic changes within the cell, among which constitutive telomerase activity and attainment of immortality are central. Expression of hTERT, the protein component of telomerase, is increased in most cancer cells. Transforming growth factor-beta (TGFbeta), a potent tumor suppressor, has been reported to regulate hTERT expression. We found that TGFbeta represses hTERT expression in normal and cancer cells and that this effect is mediated through Smad3 but also requires Erk1/2, p38 kinase and histone deacetylase activity. Furthermore, we identified four critical E2F transcription factor binding sites within the hTERT gene promoter that confer the TGFbeta response. Finally, using the E2F-1 knockout model, we showed that loss of E2F-1 abolishes TGFbeta inhibition of telomerase expression. These findings highlight the prominent role of TGFbeta in regulating telomerase expression and identify Smad3 and E2F-1 as critical mediators of TGFbeta effects in both normal and cancer cells.