Abnormal accumulation of the amyloid-β peptide (Aβ) in the brain appears crucial to pathogenesis in all forms of Alzheimer disease (AD), but the underlying mechanisms in the sporadic forms of AD remain unknown. Transforming growth factor β1 (TGF-β1), a key regulator of the brain's responses to injury and inflammation, has been implicated in Aβ deposition in vivo. Here we demonstrate that a modest increase in astroglial TGF-β1 production in aged transgenic mice expressing the human β-amyloid precursor protein (hAPP) results in a three-fold reduction in the number of parenchymal amyloid plaques, a 50% reduction in the overall Aβ load in the hippocampus and neocortex, and a decrease in the number of dystrophic neurites. In mice expressing hAPP and TGF-β1, Aβ accumulated substantially in cerebral blood vessels, but not in parenchymal plaques. In human cases of AD, Aβ immunoreactivity associated with parenchymal plaques was inversely correlated with Aβ in blood vessels and cortical TGF-β1 mRNA levels. The reduction of parenchymal plaques in hAPP/TGF-β1 mice was associated with a strong activation of microglia and an increase in inflammatory mediators. Recombinant TGF-β1 stimulated Aβ clearance in microglial cell cultures. These results demonstrate that TGF-β1 is an important modifier of amyloid deposition in vivo and indicate that TGF-β1 might promote microglial processes that inhibit the accumulation of Aβ in the brain parenchyma.