Transforming growth factor beta1 (TGFbeta1), an important pleiotropic, immunoregulatory cytokine, uses distinct signaling mechanisms in lymphocytes to affect T-cell homeostasis, regulatory T (Treg)-cell and effector-cell function and tumorigenesis. Defects in TGFbeta1 expression or its signaling in T cells correlate with the onset of several autoimmune diseases. TGFbeta1 prevents abnormal T-cell activation through the modulation of Ca2+-calcineurin signaling in a Caenorhabditis elegans Sma and Drosophila Mad proteins (SMAD)3 and SMAD4-independent manner; however, in Treg cells, its effects are mediated, at least in part, through SMAD signaling. TGFbeta1 also acts as a pro-inflammatory cytokine and induces interleukin (IL)-17-producing pathogenic T-helper cells (Th IL-17 cells) synergistically during an inflammatory response in which IL-6 is produced. Here, we will review TGFbeta1 and its signaling in T cells with an emphasis on the regulatory arm of immune tolerance.