Cystatin C (CystC) is a secreted cysteine protease inhibitor that regulates bone resorption, neutrophil chemotaxis, and tissue inflammation, as well as resistance to bacterial and viral infections. CystC is ubiquitously expressed and present in most bodily fluids where it inhibits the activities of cathepsins, a family of cysteine proteases that can promote cancer cell invasion and metastasis. Transforming growth factor β (TGF-β) is a multifunctional cytokine endowed with both tumor-suppressing and tumor-promoting activities. We show herein that TGF-β treatment up-regulated CystC transcript and protein in murine 3T3-L1 fibroblasts. Moreover, CystC mRNA expression was down-regulated in ∼50% of human malignancies, particularly cancers of the stomach, uterus, colon, and kidney. Overexpression of CystC in human HT1080 fibrosarcoma cells antagonized their invasion through synthetic basement membranes in part via a cathepsin-dependent pathway. Independent of effects on cathepsin activity, CystC also reduced HT1080 cell gene expression stimulated by TGF-β. Invasion of 3T3-L1 cells occurred through both cathepsin- and TGF-β-dependent pathways. Both pathways were blocked by CystC, but only the TGF-β-dependent pathway was blocked by a CystC mutant (i.e., Δ14CystC) that is impaired in its ability to inhibit cathepsin activity. Moreover, CystC and Δ14CystC both inhibited 3T3-L1 cell gene expression stimulated by TGF-β. We further show that CystC antagonized TGF-β binding to its cell surface receptors, doing so by interacting physically with the TGF-β type II receptor and antagonizing its binding of TGF-β. Collectively, our findings have identified CystC as a novel TGF-β receptor antagonist, as well as a novel CystC-mediated feedback loop that inhibits TGF-β signaling.