Transforming growth factor-beta (TGF-beta) plays a critical role in bone remodeling. TGF-beta stimulates matrix protein synthesis, has dramatic effects on the bone cells responsible for bone formation and resorption, and is abundant in bone and bone-conditioned media. Multiple sources of TGF-beta have been described. It was initially purified from platelets. Two distinct forms of TGF-beta have been purified from bone. The second form, TGF-beta II, was initially purified from bone but was then identified in platelets and also as the major TGF-beta in the monkey kidney BSC-1 cell line. The two bone-derived factors were called cartilage-inducing Factor A (CIF-A) and cartilage-inducing Factor B (CIF-B), based on their capacity to induce the formation of extracellular matrix proteins, which are characteristic of cartilage. CIF-A is identical to the TGF-beta purified from platelets, which is called TGF-beta I. CIG-B is the same as TGF-beta II, which was sequenced soon after CIF-B was discovered and characterized. There is 70% sequence homology between the two forms. The largest source of TGF-beta in the body is present in bone (200 micrograms/kg tissue), although the most concentrated source is in platelets. TGF-beta has multiple effects on bone cells depending on their phenotype and/or stage of differentiation. Osteoblasts, the cells responsible for formation of new bone and perhaps cellular control of bone remodeling, are directly affected by TGF-beta, which can induce differentiation or proliferation, depending on the osteoblastic cell type examined. TGF-beta inhibits the formation of osteoclast precursors and bone resorption and, in greater concentrations, has inhibitory effects on isolated osteoclasts, the cells responsible for bone resorption. TGF-beta may act as a bone-coupling factor linking bone resorption to bone formation.