Previous studies have shown that peripheral blood monocytes can be converted in vitro to a stem cell-like cell termed PCMO as evidenced by the re-expression of pluripotency-associated genes, transient proliferation, and the ability to adopt the phenotype of hepatocytes and insulin-producing cells upon tissue-specific differentiation. However, the regulatory interactions between cultured cells governing pluripotency and mitotic activity have remained elusive. Here we asked whether activin(s) and TGF-β(s), are involved in PCMO generation. De novo proliferation of PCMO was higher under adherent vs. suspended culture conditions as revealed by the appearance of a subset of Ki67-positive monocytes and correlated with down-regulation of p21WAF1 beyond day 2 of culture. Realtime-PCR analysis showed that PCMO express ActRIIA, ALK4, TβRII, ALK5 as well as TGF-β1 and the βA subunit of activin. Interestingly, expression of ActRIIA and ALK4, and activin A levels in the culture supernatants increased until day 4 of culture, while levels of total and active TGF-β1 strongly declined. PCMO responded to both growth factors in an autocrine fashion with intracellular signaling as evidenced by a rise in the levels of phospho-Smad2 and a drop in those of phospho-Smad3. Stimulation of PCMO with recombinant activins (A, B, AB) and TGF-β1 induced phosphorylation of Smad2 but not Smad3. Inhibition of autocrine activin signaling by either SB431542 or follistatin reduced both Smad2 activation and Oct4A/Nanog upregulation. Inhibition of autocrine TGF-β signaling by either SB431542 or anti-TGF-β antibody reduced Smad3 activation and strongly increased the number of Ki67-positive cells. Furthermore, anti-TGF-β antibody moderately enhanced Oct4A/Nanog expression. Our data show that during PCMO generation pluripotency marker expression is controlled positively by activin/Smad2 and negatively by TGF-β/Smad3 signaling, while relief from growth inhibition is primarily the result of reduced TGF-β/Smad3, and to a lesser extent, activin/Smad2 signaling.