We examined whether endothelial cells (ECs) inhibit smooth muscle cell (SMC) transforming growth factor-1 (TGF-1) activation in bilayer coculture. Western analysis showed that SMCs cocultured with ECs as a bilayer had lower amounts of active TGF-1 protein compared with SMCs cultured alone and SMCs cocultured with ECs as a monolayer. EC inhibition of TGF-1 activation could be blocked with plasminogen activator inhibitor-1 (PAI-1) antibody. Similarly, SMC hill-and-valley growth, a marker for TGF-1 activity, was present in SMCs cultured alone and SMCs cocultured with ECs as a monolayer but was absent in SMCs cocultured as a bilayer. SMCs cocultured with ECs as a bilayer migrated at a greater rate than SMCs cultured either alone or cocultured as a monolayer. The EC effect on SMC migration was inhibited by the addition of 5 ng/ml TGF-1. ECs had no effect on SMC RNA levels of TGF-1. PAI-1 levels were increased in ECs and ECs cocultured with SMCs compared with SMCs cultured alone. ECs inhibit TGF-1 activation in bilayer coculture. This appears to be mediated through an increase in EC PAI-1 release. Alterations in coculture conditions, in particular the degree of EC-SMC cell contact, have profound effects on this process.