We recently found evidence of tubular epithelial-myofibroblast transdifferentiation (TEMT) during the development of tubulointerstitial fibrosis in the rat remnant kidney. This study investigated the mechanisms that induce TEMT in vitro. The normal rat kidney tubular epithelial cell line (NRK52E) was cultured for six days on plastic or collagen type I-coated plates in the presence or absence of recombinant transforming growth factor-beta1 (TGF-beta1). Transdifferentiation of tubular cells into myofibroblasts was assessed by electron microscopy and by expression of alpha-smooth muscle actin (alpha-SMA) and E-cadherin. NRK52E cells cultured on plastic or collagen-coated plates showed a classic cobblestone morphology. Culture in 1 ng/ml TGF-beta caused only very minor changes in morphology, but culture in 10 or 50 ng/ml TGF-beta1 caused profound changes. This involved hypertrophy, a loss of apical-basal polarity and microvilli, with cells becoming elongated and invasive, the formation of a new front-end back-end polarity, and the appearance of actin microfilaments and dense bodies. These morphological changes were accompanied by phenotypic changes. Double immunohistochemistry staining showed that the addition of TGF-beta1 to confluent cell cultures caused a loss of the epithelial marker E-cadherin and de novo expression of alpha-SMA. An intermediate stage in transdifferentiation could be seen with hypertrophic cells expressing both E-cadherin and alpha-SMA. De novo alpha-SMA expression was confirmed by Northern blotting, Western blotting, and flow cytometry. In particular, cells with a transformed morphology showed strong alpha-SMA immunostaining of characteristic microfilament structures along the cell axis. There was a dose-dependent increase in the percentage of cells expressing alpha-SMA with increasing concentrations of TGF-beta1, which was completely inhibited by the addition of a neutralizing anti-TGF-beta1 antibody. Compared with growth on plastic, cell culture on collagen-coated plates showed a threefold increase in the percentage of cells expressing alpha-SMA in response to TGF-beta1. TGF-beta1 is a key mediator that regulates, in a dose-dependent fashion, transdifferentiation of tubular epithelial cells into alpha-SMA+ myofibroblasts. This transdifferentiation is markedly enhanced by growth on collagen type I. These findings have identified a novel pathway that may contribute to renal fibrosis associated with overexpression of TGF-beta1 within the diseased kidney.