Skeletal muscle satellite cells were cultured from mature rats and were treated in vitro with transforming growth factor‐beta (TGF‐beta). Muscle‐specific protein synthesis and satellite cell fusion were used as indicators of muscle differentiation; a dose‐dependent inhibition of differentiation was observed in response to TGF‐beta. In addition, TGF‐beta depressed cell proliferation in a dose‐dependent manner. Half‐maximal inhibition of differentiation was seen with a TGF‐beta concentration of approximately 0.1 ng/ml. Although proliferation was not inhibited, it was depressed and half‐maximal suppression of proliferation occurred in response to 0.1–0.5 ng TGF‐beta/ml. Neonatal rat myoblasts were also subjected to TGF‐beta treatment, and similar results were observed. Neonatal cells, however, were more sensitive to TGF‐beta than satellite cells, as indicated by the reduced concentrations of TGF‐beta required to inhibit differentiation and reduce the rate of proliferation. Under identical culture conditions proliferation of muscle‐derived fibroblasts were also depressed. The differentiation inhibiting effect of TGF‐beta on satellite cells was reversible. It has been suggested that TGF‐beta could be an important regulator of tissue repair, and its in vitro effects on satellite cells suggest a possible role in regulation of muscle regeneration.