Transforming growth factor (TGF)-β1, a member of the TGF-β superfamily, is produced by many immune and nonimmune cells and has pleiotropic effects on both innate and adaptive immunity, especially in the control of T-cell differentiation and function. Consistently, loss of TGF-β1 function is associated with exacerbated T-cell-dependent inflammatory responses that culminate in pathological processes in allergic and immune-mediated diseases. In this review, we highlight the roles of TGF-β1 in immunity, focusing mainly on its ability to promote differentiation of regulatory T cells, T helper (Th)-17, and Th9 cells, thus contributing to amplifying or restricting T-cell responses in health and human diseases (e.g., inflammatory bowel diseases, type 1 diabetes, asthma, and MS). In addition, we discuss the involvement of Smad7, an inhibitor of TGF-β1 signaling, in immune-mediated disorders (e.g., psoriasis, rheumatoid arthritis, MS, and inflammatory bowel diseases), as well as the discordant results of clinical trials with mongersen, an oral pharmaceutical compound containing a Smad7 antisense oligonucleotide, in patients with Crohn's disease. Further work is needed to ascertain the reasons for such a discrepancy as well as to identify better candidates for treatment with Smad7 inhibitors.