The transforming growth factor-beta (TGF-beta) type I (T beta R-I) and type II (T beta R-II) receptors are responsible for transducing TGF-beta signals. We have previously shown that inhibition of farnesyltransferase activity results in an increase in T beta R-II expression, leading to enhanced TGF-beta binding, signaling, and inhibition of tumor cell growth, suggesting that a farnesylated protein(s) exerts a repressive effect on T beta R-II expression. Likely candidates are farnesylated proteins such as Ras and RhoB, which are both farnesylated and involved in cell growth control. Neither a dominant negative Ha-Ras, constitutively activated Ha-Ras, or a pharmacological inhibitor of MEK1 affected T beta R-II transcription. However, ectopic expression of RhoB, but not the closely related family member RhoA, resulted in a 5-fold decrease of T beta R-II promoter activity. Furthermore, ectopic expression of RhoB, but not RhoA, resulted in a significant decrease of T beta R-II protein expression and resistance of tumor cells to TGF-beta-mediated cell growth inhibition. Deletion analysis of the T beta R-II promoter identified a RhoB-responsive region, and mutational analysis of this region revealed that a site for the transcription factor activator protein 1 (AP1) is critical for RhoB-mediated repression of T beta R-II transcription. Electrophoretic mobility shift assays clearly showed that the binding of AP1 to its DNA-binding site is strongly inhibited by RhoB. Consequently, transcription assays using an AP1 reporter showed that AP1-mediated transcription is down-regulated by RhoB. Altogether, these results identify a mechanism by which RhoB antagonizes TGF-beta action through transcriptional down-regulation of AP1 in T beta R-II promoter.