Angiogenesis is essential to both normal and pathological bone physiology. Vascular endothelial growth factor (VEGF) has been implicated in angiogenesis, whereas transforming growth factor-β1 (TGF-β1) modulates bone differentiation, matrix formation, and cytokine expression. The purpose of this study was to investigate the relationship between TGF-β1 and VEGF expression in osteoblasts and osteoblast-like cells. Northern blot analysis revealed an early peak of VEGF mRNA (6-fold at 3 h) in fetal rat calvarial cells and MC3T3-E1 osteoblast-like cells after stimulation with TGF-β1 (2.5 ng/ml). The stability of VEGF mRNA in MC3T3-E1 cells was not increased after TGF-β1 treatment. Actinomycin D inhibited the TGF-β1-induced peak in VEGF mRNA, whereas cycloheximide did not. Blockade of TGF-β1 signal transduction via a dominant-negative receptor II adenovirus significantly decreased TGF-β1 induction of VEGF mRNA. Additionally, TGF-β1 induced a dose-dependent increase in VEGF protein expression by MC3T3-E1 cells (P < 0.01). Dexamethasone similarly inhibited VEGF protein expression. Both TGF-β1 mRNA and VEGF mRNA were concurrently present in rat membranous bone, and both followed similar patterns of expression during rat mandibular fracture healing (mRNA and protein). In summary, TGF-β1-induced VEGF expression by osteoblasts and osteoblast-like cells is a dose-dependent event that may be intimately related to bone development and fracture healing.