Transforming growth factor-beta (TGF-beta) is a multifunctional peptide that elicits a wide variety of responses in cells. TGF-beta binds to cell surface receptors that contain cytoplasmic serine/threonine kinase domains. Here we provide evidence that both phospholipase C and protein kinase C (PKC) are involved in the TGF-beta activation of transcription and luciferase expression from the p3TP-Lux plasmid. Down-regulation of PKC prevents TGF-beta 1 induction of luciferase expression. Staurosporin and Calphostin C, inhibitors of PKC, block the ability of TGF-beta 1 to initiate transcription of the luciferase gene. Further, D609, an inhibitor of phosphatidylcholine-phospholipase C (PC-PLC), and secondarily PKC also blocks TGF-beta 1-induced transcription of the transgene in A549 cells while the phosphatidylinositol-PLC pathway inhibitor U73122 is without effect. TGF-beta elevates steady-state mRNA levels for the endogenous PAI-1 and fibronectin genes. Treatment of cells with calphostin C or D609 prevents the TGF-beta-induced increase in these mRNAs. Together, these results suggest that PC-PLC and PKC are in a TGF-beta signaling pathway that results in elevated gene expression.