Phytosulfokine (PSK) is a sulfated peptide hormone required for the proliferation and differentiation of plant cells. Here, we characterize the physiological roles of PSK in transdifferentiation of isolated mesophyll cells of zinnia (Zinnia elegans 'Canary Bird') into tracheary elements (TEs). Transcripts for a zinnia PSK precursor gene, ZePSK1, show two peaks of expression during TE differentiation; the first accumulation is transiently induced in response to wounding at 24 h of culture, and the second accumulation is induced in the final stage of TE differentiation and is dependent on endogenous brassinosteroids. Chlorate, a potent inhibitor of peptide sulfation, is successfully applied as an inhibitor of PSK action. Chlorate significantly suppresses TE differentiation. The chlorate-induced suppression of TE differentiation is overcome by exogenously applied PSK. In the presence of chlorate, expression of stress-related genes for proteinase inhibitors and a pathogenesis-related protein is enhanced and changed from a transient to a continuous pattern. On the contrary, administration of PSK significantly reduces the accumulation of transcripts for the stress-related genes. Even in the absence of auxin and cytokinin, addition of PSK suppresses stress-related gene expression. Microarray analysis reveals 66 genes down-regulated and 42 genes up-regulated in the presence of PSK. The large majority of down-regulated genes show significant similarity to various families of stress-related proteins, including chitinases, phenylpropanoid biosynthesis enzymes, 1-aminocyclopropane-1-carboxylic acid synthase, and receptor-like protein kinases. These results suggest the involvement of PSK in the attenuation of stress response and healing of wound-activated cells during the early stage of TE differentiation.