Transforming growth factor beta (TGFbeta) is thought to play an important role in the development and/or progression of a number of vascular disorders through its numerous effects on vascular smooth muscle cells (VSMCs). In this study we sought to identify and characterize TGFbeta-regulated VSMC genes using differential mRNA display (DD-RT-PCR) analysis of RNA isolated from TGFbeta-stimulated cultured rat aortic VSMCs. Northern blot analysis was used to demonstrate that five of 19 differentially displayed bands identified represented VSMC transcripts differentially expressed by TGFbeta. DNA sequencing revealed that three of these TGFbeta regulated genes were novel whilst the remaining two were identified through homologies to known genes. One TGFbeta upregulated transcript represented the protease cathepsin B. Since cathepsins may play a role in TGFbeta activation, an enzyme-linked immunosorbent assay (ELISA) for active TGFbeta1 was used to demonstrate an effect of cathepsin B on TGFbeta1 activation in vitro using both recombinant and human serum platelet-derived latent TGFbeta1 as substrate. These results suggest that induction of cathepsin B by TGFbeta, and its ability to activate TGFbeta1, may represent a mechanism whereby the autocrine action of TGFbeta is facilitated through expression of a protein which can process its latent form.