Dermal papilla cells (DPCs) in the mammalian hair follicle have been shown to develop hair follicles through epithelial-mesenchymal interactions. A cell therapy to regenerate human hair is theoretically possible by expanding autologous human DPCs (hDPCs) and transplanting them into bald skin, though much remains to be overcome before clinical success. In this study, we compared gene signatures of hDPCs at different passages and human dermal fibroblasts, and found transforming growth factor (TGF)-beta(2) to be highly expressed in cultured hDPCs. Keratinocyte conditioned medium, which is known to help preserve the hair-inducing capacity of hDPCs, up-regulated TGF-beta(2) expression of hDPCs and also enhanced their alkaline phosphatase (ALP) activity, a known index for hair-inductive capacity. Through screening of components secreted from keratinocytes, the vitamin D(3) analogue was found to promote TGF-beta(2) expression and ALP activity of hDPCs. In animal hair folliculogenesis models using rat epidermis and expanded hDPCs, inhibition of TGF-beta(2) signalling at the ligand or receptor level significantly impaired hair folliculogenesis and maturation. These results suggest an important role for TGF-beta(2) in hair follicle morphogenesis and provide insights into the establishment of future cell therapies for hair regrowth by transplanting expanded DPCs.