Pre-adipocyte 3T3-Ll cells, after an appropriate induction stimulus, proceed through a defined change in morphology as differentiation progresses. Transforming growth factor PI (TGFP,) is able to block the morphological and biochemical changes which occur with differentiation of these cells if given within 36-40 h of induction [Ignotz and Massague (1 985): Proc Natl Acad Sci USA 82:8530-85341. To begin to elucidate the role of the extracellular matrix in adipogenesis, as well as the mechanism whereby TGFP, inhibits differentiation, we examined the expression of two extracellular matrix genes, type I (a,) procollagen and fibronectin, as well as endogenous TGFP,. Confluent cells were induced to differentiate by treatment with insulin, dexamethasone, and isobutylmethylxanthine in the presence or absence of TGFP,. Following 6 days of treatment, the cells in the differentiated group acquired the rounded shape of mature adipocytes; the cytosol of these cells also contained numerous lipid-filled vesicles, as demonstrated by oil red 0 staining. Cells treated with the differentiation compounds in the presence of TGFP, maintained the fibroblast-like appearance of control cells and did not stain with oil red 0. At the level of gene expression, both procollagen and fibronectin mRNAs were down-regulated during differentiation of 3T3-LI cells. When cells from the control or differentiation groups were treated with TGFP,, there was a 2-5-fold induction of procollagen and fibronectin mRNAs throughout the 6-day time course. No change in type I procollagen transcription was observed by nuclear run-on analysis, suggesting that the increase in procollagen mRNA with TCFP, treatment was due to a post-transcriptional process(es). However, both transcriptional and post-transcriptional components were observed in the regulation of fibronectin gene expression by TGFP,. In addition, TGFP, was found to positively regulate its own expression, as treatment of the cells with TGFP, enhanced endogenous TGFP, expression and prevented the small decrease in TGFP, mRNA levels which occurred early during the differentiation program. Thus, our data demonstrate that down-regulation of type I procollagen, fibronectin, and TGFP, gene expression was prevented during TGFP inhibition of 3T3-Ll differentiation. Taken together, these data suggest that TGFP may inhibit differentiation of 3T3-LI cells by maintaining the fibroblast-like extracellular matrix, thus preventing the changes in cell shape that accompany differentiation.