The beta type transforming growth factors (TGF-beta) are potent inhibitors of epithelial cell proliferation, and data suggest that growth inhibition by TGF-beta 1 is mediated through suppression of Myc family genes in certain cell types. Indirect evidence has indicated that the product of the retinoblastoma gene (pRb) may also be involved in this pathway. Previously, we have shown that TGF-beta 1 inhibits branching morphogenesis and N-myc expression in mouse embryonic lung cultures. The purpose of this study was to determine the role of pRb in the inhibition of branching morphogenesis and N-myc expression by TGF-beta 1. Treatment with TGF-beta 1 was shown to inhibit development of lungs from homozygous Rb null (Rb-/-) and heterozygous null (Rb+/-) mouse embryos to the same extent as lungs from wild-type (Rb+/+) embryos. However, TGF-beta 1 treatment did not suppress N-myc expression in Rb-/- as it did in Rb+/+ embryonic lung explants as determined by in situ hybridization and quantitative RT-PCR. The effect of TGF-beta 1 treatment on N-myc expression in lungs from Rb+/- embryos was intermediate between that seen in Rb+/+ and Rb-/- embryos. Embryonic lungs derived from transgenic mice expressing the SV40 large T-antigen in lung epithelium under the control of the surfactant protein C promoter also showed inhibition of development in response to TGF-beta 1 treatment. The data demonstrate that pRb is necessary for TGF-beta 1 suppression of N-myc expression but not for TGF-beta 1 inhibition of branching morphogenesis; therefore, suppression of N-myc is not necessary for inhibition of branching morphogenesis by TGF-beta 1.