When cultured in type I collagen gels, two kidney-derived cell lines, Madin-Darby canine kidney (MDCK) cells and murine inner medullary collecting duct (mIMCD3) cells, from branching tubular structures in the presence of Swiss 3T3 conditioned medium, in which hepatocyte growth factor (HGF) is the major branching tubule inducing factor. However, upon incubation with transforming growth factor-beta (TGF-beta) in the presence of 3T3 conditioned medium, MDCK tubulogenesis and branching was markedly inhibited. In contrast, mIMCD3 cells, which are much less susceptible to growth and tubulogenesis inhibition by TGF-beta, formed long straight tubulelike structures in presence of TGF-beta, suggesting a dissociation between tubulogenesis and branching morphogenesis. Interestingly, those long tubules that did branch often superficially resembled the early branching ureteric bud in embryonic kidneys. Quantitation of branching events revealed a selective branch-inhibiting effect of TGF-beta on mIMCD3 cells at concentrations between 0.02 and 2 ng/ml. There was no qualitative or quantitative difference among TGF-beta 1, -beta 2, and -beta 3 on inhibition of branching events, suggesting existence of potentially redundant mechanisms for modulating branching morphogenesis. Concentrations of TGF-beta that resulted in long nonbranching tubules also altered the profile of extracellular matrix-degrading proteases and their inhibitors expressed by developing tubules. Ratios of urokinase type plasminogen activator (u-PA) to plasminogen activator inhibitor (PAI-l) and matrix metalloprotease (MMP)-1 to tissue inhibitor of metalloprotease (TIMP)-1 were both markedly decreased. In addition, apart from a direct effect on epithelial cell branching morphogenesis, TGF-beta downregulated the expression of HGF mRNA in Swiss 3T3 cells. Thus TGF-beta exerts at least three distinct effects relevant to tubulogenesis and branching morphogenesis inhibition of branching morphogenesis alone (mIMCD3 cells), inhibition of both tubulogenesis and branching morphogenesis (MDCK cells), and inhibition of the expression of growth factor which induce tubulogenesis and branching morphogenesis (3T3 cells). In the context of epithelial tissue development, which requires tightly regulated branching tubulogenesis of epithelial cells, the data suggest a model where branching patterns are regulated by a precise temporal and spatial balance between branching morphogens such as HGF and inhibitory morphogens such as members of the TGF-beta superfamily [e.g., TGF-beta isoforms, certain bone morphogenetic proteins].