The present study explores the mechanisms by which human prostatic carcinoma-associated fibroblasts (CAF) induce tumorigenesis in initiated but nonmalignant human prostatic epithelial cells (BPH-1). CAF express elevated levels of both transforming growth factor-beta1 (TGF-beta1) and stromal cell-derived factor-1 (SDF-1/CXCL12). TGF-beta inhibits the growth of BPH-1 cells in vitro, but was found to be necessary for the tumorigenic response to CAF. This counterintuitive result suggested that the TGF-beta signaling system was involved in other processes relating to tumorigenesis. The SDF-1 receptor, CXCR4, is expressed at low levels in benign prostate tissue and in BPH-1 cells in culture. However, CXCR4 levels increase during prostate cancer progression. CXCR4 was found to be induced and localized to the cell membrane in BPH1 cells by CAF-conditioned medium and by CAF cells in tissue recombinants. TGF-beta was both necessary and sufficient to allow the detection of membrane-localized CXCR4 in BPH1 cells. Suppression of epithelial cell CXCR4 expression abrogated the tumorigenic response to CAF. SDF-1, secreted by CAF, acts via the TGF-beta-regulated CXCR4 to activate Akt in the epithelial cells. This mechanism elicits tumorigenesis and obviates the growth-inhibitory effects of TGF-beta. Thus, tumor stroma can contribute to carcinogenesis through synergism between TGF-beta, SDF-1, and CXCR4. These experiments suggest mechanisms by which TGF-beta can shift its role from an inhibitor to a promoter of proliferation during tumor progression. Both the TGF-beta and SDF-1 pathways are targets of drug discovery efforts; these data suggest potential benefits in the cotargeting of these pathways.