Transgenic mice expressing transforming growth factor-beta 1 (TGF-beta 1) in the pancreatic beta-islet cells directed by human insulin promoter were produced to study in vivo effects of TGF-beta 1. Fibroblast proliferation and abnormal deposition of extracellular matrix were observed from birth onward, finally replacing almost all the exocrine pancreas. Cellular infiltrates comprising macrophages and neutrophils were also observed. Plasminogen activator inhibitor was induced in the transgenic pancreas as well as fibronectin and laminin, partly explaining accumulation of extracellular matrix. TGF-beta 1 inhibited proliferation of acinar cells in vivo as evidenced by decreased bromodeoxyuridine incorporation. Development of pancreatic islets was dysregulated, resulting in small islet cell clusters without formation of normal adult islets; however, the overall islet cell mass was not significantly diminished. Additional transgenic lines with less pronounced phenotypes had less expression of TGF-beta 1 transgene. These findings suggest that TGF-beta 1 might be a mediator of diseases associated with extracellular matrix deposition such as chronic pancreatitis, and this mouse model will be useful for further analysis of the in vivo effects of TGF-beta 1, including its potential for immunosuppression.