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Tumours develop in both mice and humans as a consequence of sequential genetic alterations at critical genomic loci. These changes involve mutations in oncogenes such as ras, and in tumour suppressor loci, including the p53 and p16 genes. Our strategy has been to investigate the genetic alterations which take place during mouse skin tumour development, and subsequently to use both transgenic and knock-out mice to test the functions of candidate genes in vivo. Genes implicated in multistage carcinogenesis include H-ras, p53 and Transforming Growth Factor Beta (TGFb). Mice expressing TGFb develop fewer papillomas than non-transgenic littermates, but have elevated rates of tumour progression. This indicates that TGFb can act either positively or negatively at different stages of carcinogenesis. We have proposed that TGFb can act as a negative regulator of cell cycle progression during the early phase of tumorigenesis, but positively induces invasion and angiogenesis during progression to malignancy. This possibility is supported by studies involving transfection of dominant negative TGFb type II receptor constructs into invasive carcinoma cells. This results in suppression of the invasive phenotype and the restoration of expression of some adhesion proteins such as E-cadherin. We have shown that TGFb signalling can also be upregulated by genetic alterations in highly malignant spindle carcinoma cells. Many of the features characteristic of the invasive, metastatic phenotype of these cells can be reversed by the introduction of dominant negative interfering mutants that disrupt Smad signalling. Thresholds of Smad activity are important at distinct stages of tumor progression, cooperating with activated ras to induce invasion or dissemination to distant sites (refs 1-4).