Transforming growth factor β (TGF-β) signaling facilitates tumor development during the advanced stages of tumorigenesis, but induces cell-cycle arrest for tumor suppression during the early stages. However, the mechanism of functional switching of TGF-β is still unknown, and it is unclear whether inhibition of TGF-β signaling results amelioration or exacerbation of cancers. Here we show that the tumor suppressor p53 cooperates with Smad proteins, which are TGF-β signal transducers, to selectively activate plasminogen activator inhibitor type-1 (PAI-1) transcription. p53 forms a complex with Smad2/3 in the PAI-1 promoter to recruit histone acetyltransferase CREB-binding protein (CBP) and enhance histone H3 acetylation, resulting in transcriptional activation of the PAI-1 gene. Importantly, p53 is required for TGF-β-induced cytostasis and PAI-1 is involved in the cytostatic activity of TGF-β in several cell lines. Our results suggest that p53 enhances TGF-β-induced cytostatic effects by activating PAI-1 transcription, and the functional switching of TGF-β is partially caused by p53 mutation or p53 inactivation during cancer progression. It is expected that these findings will contribute to optimization of TGF-β-targeting therapies for cancer.