B cell-activating factor belonging to the TNF family (BAFF) is primarily expressed by macrophages and dendritic cells and stimulates the proliferation, differentiation, and survival of B cells and their Ig production. In the present study, we examined the pathways by which TGF-beta1 and IFN-gamma induce BAFF expression to see if TGF-beta1 and IFN-gamma regulate B cell differentiation via macrophages. We found that TGF-beta1 stimulated mouse macrophages to express BAFF and that a typical TGF-beta signaling pathway was involved. Thus, Smad3 and Smad4 promoted BAFF promoter activity, and Smad7 inhibited it, and the BAFF promoter was shown to contain three Smad-binding elements. Importantly, TGF-beta1 enhanced the expression of membrane-bound and soluble forms of BAFF. IFN-gamma further augmented TGF-beta1-induced BAFF expression. IFN-gamma caused phosphorylation of CREB, and overexpression of CREB increased IFN-gamma-induced BAFF promoter activity. Furthermore, H89, a protein kinase A (PKA) inhibitor, abrogated the promoter activity. Neither Stat1alpha (a well-known transducing molecule of IFN-gamma) nor AG490 (a JAK inhibitor) affected BAFF expression in response to IFN-gamma. Taken together, these results demonstrate that TGF-beta1 and IFN-gamma up-regulate BAFF expression through independent mechanisms, i.e., mainly Smad3/4 and PKA/CREB, respectively.