Transforming growth factor beta (TGF-beta) is the prototype for an evolutionarily conserved superfamily of secreted factors implicated in diverse biological phenomena. The pleiotropic responses to TGF-beta are initiated by a heteromeric receptor complex that binds and phosphorylates downstream effectors. Among these, the Smads have been extensively studied. However, less attention has been directed toward alternative downstream effectors and their participation in TGF-beta signal transduction. We show that TGF-beta promotes accumulation of the labile monomeric GTPase RhoB by antagonizing its normal proteolytic destruction, presumably via the 26 S proteasome. RhoB accumulates in its isoprenylated form. Transient overexpression of wild type RhoB but not its dominant negative mutant RhoB-N19 antagonizes TGF-beta-mediated transcriptional activation. These results suggest a novel mechanism of regulation by TGF-beta and implicate RhoB as a negative regulator of TGF-beta signal transduction.