TGF-β, a key cytokine that regulates diverse cellular processes, including proliferation and apoptosis, appears to function paradoxically as a tumour suppressor in normal cells, and as a tumour promoter in cancer cells, but the mechanisms underlying such contradictory roles remain unknown. In particular, given that this cytokine is primarily a tumour suppressor, the conundrum of the unusually high level of TGF-β observed in the primary cancer tissue and blood samples of cancer patients with the worst prognosis, remains unresolved. To provide a quantitative explanation of these paradoxical observations, we present, from a control theory perspective, a mechanistic model of TGF-β-driven regulation of cell homeostasis. Analysis of the overall system model yields quantitative insight into how cell population is regulated, enabling us to propose a plausible explanation for the paradox: with the tumour suppressor role of TGF-β unchanged from normal to cancer cells, we demonstrate that the observed increased level of TGF-β is an effect of cancer cell phenotypic progression (specifically, acquired TGF-β resistance), not the cause. We are thus able to explain precisely why the clinically observed correlation between elevated TGF-β levels and poor prognosis is in fact consistent with TGF-β's original (and unchanged) role as a tumour suppressor.