Transforming growth factor-beta (TGF-beta) controls a wide range of cellular responses, including cell proliferation, lineage determination, differentiation, and apoptosis, and figures prominently in animal development. It is considered as a pleiotropic factor because it can exert a positive or negative effect on various cellular processes depending on developmental stage of the target cell, its microenvironment, and also its biochemical make up. It has been shown to have a strong inhibitory effect on hematopoietic stem cell proliferation and differentiation. We have earlier shown that TGF-beta1 exerts a bidirectional effect on hematopoietic cell proliferation as a function of its concentration. Although it acted as an inhibitor at high concentrations, at low concentrations it stimulated the stem/progenitor cells. We also provided evidence that the differential activation of mitogen-activated protein kinase pathways was responsible for the observed bidirectional effect. In the present study, we examined the molecular mechanism behind this phenomenon. We observed that the high inhibitory concentrations of TGF-beta1 induced a strong phosphorylation of SMAD 3 and also activated stress kinase-related transcription factors, namely c-Jun and ATF-2. On the other hand, low stimulatory concentrations acted in a SMAD 3-independent pathway and activated STAT proteins. Our results clearly show that differential activation of signal transduction pathways by TGF-beta1 as a function of its concentration underlies its bidirectional effect on hematopoietic cells.