Transforming growth factor-beta (TGF-beta), an ubiquitous regulatory peptide, has diverse effects on the differentiation and behavior of vascular smooth muscle cells (VSMC). However, the molecular mechanism through which TGF-alpha exerts its effects remains obscure. We investigated the phosphoinositide/protein kinase C [PKC] signaling pathway in the action of TGF-beta on cultured embryonic avian VSMC of differing lineage: a) thoracic aorta, derived from the neural crest; and b) abdominal aorta, derived from mesenchyme. The second messenger responsible for activation of PKC is sn-1,2-diacylglycerol [DAG]; TGF-beta increased the mass amounts of DAG in the membranes of neural crest-derived VSMC concurrent with translocation of PKC from the soluble to the membrane fraction, but TGF-beta had no effect on the DAG or PKC of mesenchyme-derived VSMC. TGF-beta potentiated the growth of platelet-derived growth factor (PDGF)-treated, neural crest-derived VSMC; but abolished PDGF-induced growth of mesenchymal cells. It is concluded that molecular and functional responses of VSMC to TGF-beta are heterogeneous and are functions of the embryonic lineage of the VSMC.