TC21(R-Ras2), a Ras-related GTPase with transforming potential similar to H-, K- and N-Ras, is implicated in the pathogenesis of human cancers. Transforming growth factor beta (TGF-beta), a cytokine that plays a significant role in modulating tumorigenesis, normally prevents uncontrolled cell proliferation but paradoxically induces proliferation in H-Ras-transformed cancer cells. Although TC21 activates some pathways that mediate cellular transformation by the classical Ras proteins, the mechanisms through which TC21 induces tumor formation and how TGF-beta regulates TC21 transformed cells is not known. To better understand the role of TC21 in cancer progression, we overexpressed an activated G23V mutant of TC21 in a nontumorigenic murine mammary epithelial (EpH4) cell line. Mutant TC21-expressing cells were significantly more oncogenic than cells expressing activated G12V H-Ras both in vivo and in vitro. TC21-induced transformation and proliferation required activation of p38 MAPK, mTOR (the mammalian target of rapamycin), and phosphoinositide 3-kinase but not Akt/PKB. Transformation by TC21 rendered EpH4 cells insensitive to the growth inhibitory effects of TGF-beta, and the soft agar growth of these cells was increased upon TGF-beta stimulation. Despite losing responsiveness to TGF-beta-mediated growth inhibition, both Smad-dependent and independent pathways remained intact in TC21-transformed cells. Thus, overexpression of active TC21 in EpH4 cells induces tumorigenicity through the phosphoinositide 3-kinase, p38 MAPK, and mTOR pathways, and these cells lose their sensitivity to the normal growth inhibitory role of TGF-beta.