Loss of growth regulation by transforming growth factor-beta (TGF-beta) may be an important step in carcinogenesis. We have used a cell fusion system to show that inhibition of growth by TGF-beta can be restored to carcinoma cell lines that are unresponsive to the inhibitory effects of TGF-beta. In a previous study, the EJ bladder carcinoma line was fused to the SW480 colon adenocarcinoma line and found to produce nontumorigenic hybrid cells along with one hybrid cell clone of low tumorigenicity. Here we show that the capacity of the nontumorigenic hybrid cells to respond to either TGF-beta 1 or TGF-beta 2 has been restored, while the parental or tumorigenic hybrid cells show little or no inhibition of growth following TGF-beta treatment. Cross-linking analyses with labeled TGF-beta 1 demonstrated much higher levels of the type II (85 kDa) receptor in the hybrid cells compared with the parental tumor lines. Both the parental and tumorigenic hybrid cell lines were capable of responding to TGF-beta as evidenced by increased levels of mRNA for fibronectin, type IV collagenase, and plasminogen activator inhibitor after treatment with TGF-beta 1. These results suggest that the type II receptor is necessary for mediating the effects of TGF-beta on inhibition of growth but not on gene activation of the hybrid cells.