Mammalian Sprouty2 (Spry2) is a key regulator of the receptor tyrosine kinase/ERK signaling pathway and is involved in many biological processes, including cell growth, differentiation, migration, and embryonic lung branching morphogenesis. Previous studies have shown that Spry2 expression is upregulated by many mitogens, particularly epidermal growth factor (EGF) and fibroblast growth factors (FGFs). In contrast, we report that transforming growth factor-beta1 (TGF-beta1), which stimulates the growth of quiescent Swiss 3T3 cells, induced a dose dependent decrease of mouse Spry2 protein level within 24-h of treatment, and this effect was mediated by a MAP kinase-independent pathway. A concomitant reduction of the level of Spry2 mRNA indicates the involvement of a transcriptional mechanism, which requires histone deacetylase (HDAC) activity and de novo protein synthesis. On the other hand, the turnover rate of Spry2 protein was increased by TGF-beta1 treatment, suggesting enhanced Spry2 degradation. Treatment with lysosomal inhibitors, but not proteasome inhibitors, prevented the degradation of Spry2, thus, indicating that the degradation of Spry2 is mediated through the lysosomal pathway in Swiss 3T3 cells. Furthermore, we demonstrate that TGF-beta1 signaling can modulate EGF and FGF-induced ERK-MAP kinase activation by controlling Spry2 expression and function. Moreover, rescue of the TGF-beta1-induced downregulation of Spry2 by gene over-expression led to inhibition of the mitogenic effect of TGF-beta1 in Swiss 3T3 cells. Together, the combined operation of transcriptional and post-translational mechanisms suggests that regulation of Spry2 is a crucial event and emphasizes the important role that Spry2 plays in controlling cell behaviors.