Accumulation of the amyloid-β (Aβ) peptide in the brain is a crucial factor in the development of Alzheimer disease. Expression of transforming growth factor-β1 (TGF-β1), an immunosuppressive cytokine, has been associated in vivo with Aβ accumulation in transgenic mice and recently with Aβ clearance by activated microglia, suggesting its deleterious and beneficial effects in neuronal cells. In this study, we demonstrated that TGF-β1 stimulated the production of matrix metalloproteinase-2 (MMP-2) in a time- and dose-dependent manner in a human monocytic THP-1 cell line. Notably, we found that Aβ1-42 consistently inhibited the TGF-β1-induced production of MMP-2, the endogenous gene containing Smad response elements, whereas the reverse peptide, Aβ42-1, evidenced little effect. Additionally, Aβ1-42 reduced TGF-β1-induced increase in plasminogen activator inhibitor-1 (PAI-1). This inhibitory effect of Aβ1-42 was also seen in human astroglial T98G cell line. Furthermore, Aβ1-42 significantly induced the expression of Smad7, which appears in turn to mediate the Aβ suppression of the TGF-β1-induced MMP-2 production. Indeed, Smad7 overexpression mimicked the inhibitory effect of Aβ1-42 on TGF-β1-induced MMP-2 production. Importantly, Aβ1-42 markedly suppressed the transactivation of the transfected reporter construct, p3TP-Lux, which contains TGF-β1-inducible Smad response elements. This was concomitant with a decreased MMP-2 production in TGF-β1-treated cells. Inhibition of cellular Smad7 levels via the small interference RNA method significantly ameliorated the Aβ1-42-mediated suppression of TGF-β1-inducible transcription reporter activity, thereby restoring MMP-2 induction, whereas Smad7 transfection down-regulated TGF-β-inducible transcription reporter activity. Collectively, these data suggest that Aβ1-42 may play an important role in the negative regulation of TGF-β1-induced MMP-2 production via Smad7 expression.