Transforming growth factor beta (TGF beta) treatment of rat osteoblast-rich calvarial cells or of the clonal osteogenic sarcoma cells, UMR 106-01, resulted in dose-dependent inhibition of plasminogen activator (PA) activity, and increased production of 3.2 kb mRNA and protein for PA inhibitor -1 (PAI-1). Although tissue-type PA (tPA) protein was not measured, TGF beta did not influence production of mRNA for tPA. Production of 2.3 kb mRNA for urokinase-type PA (uPA) was also increased by TGF beta in a dose-dependent manner. The effects of TGF beta on synthesis of mRNA for PAI-1 and uPA were maintained when protein synthesis was inhibited, and were abolished by inhibition of RNA synthesis. Although uPA had not been detected previously as a product of rat osteoblasts, treatment of lysates of osteoblast-like cells with plasmin yielded a band of PA activity on reverse fibrin autography, corresponding to a low Mr form of uPA. Untreated conditioned media from normal osteoblasts or UMR 106-01 cells contained no significant TGF beta activity, but activity could be detected in acidified medium. Treatment of conditioned media with plasmin resulted in activation of approximately 50% of the TGF beta detectable in acidified media. The results identify several effects of TGF beta on the PA-PA inhibitor system in osteoblasts. Net regulation of tPA activity through the stimulatory actions of several calciotropic hormones and the promotion of PAI-1 formation by TGF beta could determine the amount of osteoblast-derived TGF beta activated locally in bone. Stimulation of osteoblast production of mRNA for uPA could reflect effects on the synthesis of sc-uPA, a precursor for the active form of the enzyme.