To current knowledge, transforming growth factor beta (TGF beta) signaling is mandatory to establish liver fibrosis and various molecular interventions designed to affect the TGF beta system were successfully used to inhibit fibrogenesis. Activated hepatic stellate cells (HSC), which are one important source of TGF, are the major producers of extracellular matrix proteins in liver injury. We have previously shown that the TGF beta response of this cell type is modulated during the transdifferentiation process. This work delineates the activation of TGF beta downstream mediators, the Smads, in quiescent HSC and transdifferentiated myofibroblasts (MFB). The expression level of all Smads remained largely unchanged during this process. The response of HSC to TGF beta, leading to, e.g., induction of alpha2 (I) collagen expression, is mediated by phosphorylation of Smad2 and Smad3 and subsequent nuclear translocation of a Smad containing complex. Neither TGF beta -dependent nor endogenously phosphorylated Smad2/3 was detectable in comparable amounts in transdifferentiated MFB, indicating loss of TGF beta sensitivity. Ectopic expression of Smad7 in HSC led to inhibition of Smad2 phosphorylation and abrogated TGF beta response. In transdifferentiated MFB, expression of a constitutively active TGF beta receptor I, but not treatment with TGF beta1, resulted in transcriptional activation of a TGF beta responsive promoter, thereby demonstrating completely restored TGF beta signal transduction. Our data indicate that in contrast to a postulated mechanism of enduring autocrine TGF beta signal transduction, early and late stages of HSC activation have to be distinguished, which is of importance for antifibrotic therapies. (C) 2001 Federation of European Biochemical Societies. Published by Elsevier Science B.V. All rights reserved.