Transforming growth factor β(TGF-β) stimulates reactive oxygen species (ROS) production in various cell types, which mediates many of the effects of TGF-β. The molecular mechanisms whereby TGF-β increases ROS production and ROS modulate the signaling processes of TGF-β, however, remain poorly defined. In this study, we show that TGF-β1 stimulates NADPH oxidase 4 (Nox4) expression and ROS generation in the nucleus of murine embryo fibroblasts (NIH3T3 cells). This is associated with an increase in protein thiol modification and inactivation of MAPK phosphatase 1 (MKP-1), a nuclear phosphatase. Furthermore, knockdown of MKP-1 using small interfering RNA enhances TGF-β1-induced phosphorylation of JNK and p38 as well as the expression of plasminogen activator inhibitor 1 (PAI-1), a TGF-β-responsive gene involved in the pathogenesis of many diseases. Knockdown of Nox4 with Nox4 small interfering RNA, on the other hand, reduces TGF-β1-stimulated ROS production, p38 phosphorylation, and PAI-1 expression. TGF-β also increased the nuclear level of Nox4 protein as well as PAI-1 expression in human lung fibroblasts (CCL-210 cells), suggesting that TGF-β may induce PAI-1 expression by a similar mechanism in human lung fibroblasts. In summary, in this study we have identified nuclear MAPK phosphatase MKP-1 as a novel molecular target of ROS in TGF-β signaling pathways. Our data suggest that increased generation of ROS by Nox4 mediates TGF-β1-induced PAI-1 gene expression at least in part through oxidative modification and inhibition of MKP-1 leading to a sustained activation of JNK and p38 MAPKs. © 2010 by The American Society for Biochemistry and Molecular Biology, Inc.