Dose-escalated chemotherapy has proven utility in a variety of treatment settings, including preparative regimens before bone marrow or hematopoietic stem cell transplantation. However, the potential damage imposed by aggressive regimens on the marrow microenvironment warrants further investigation. In the present study, we tested the hypothesis that dose-escalated chemotherapy, with etoposide as a model chemotherapeutic agent, activates the transforming growth factor beta-1 (TGF-beta1) signaling pathway in bone marrow stromal cells. After high-dose etoposide exposure in vitro, Smad3 protein was phosphorylated in a time-and dose-dependent manner in marrow-derived stromal cells, coincident with the release of active and latent TGF-beta1 from the extracellular matrix. Phosphorylation was modulated by p38 kinase, with translocation of Smad3 from the cytoplasm to the nucleus subsequent to its phosphorylation. Etoposide induced activation of TGF-beta1 followed the generation of reactive oxygen species and required matrix metalloproteinase-2 (MMP-2) protein availability. Chemotherapy effects were diminished in MMP-2(-/-) knockout stromal cells and TGF-beta1 knockdown small interfering RNA-transfected stromal cells, in which phosphorylation of Smad3 was negligible after etoposide exposure. Stable transfection of a human MMP-2 cDNA into bone marrow stromal cells resulted in elevated phosphorylation of Smad3 during chemotherapy. These data suggest TGF-beta1/p38/Smad3 signaling cascades are activated in bone marrow stromal cells after dose-escalated chemotherapy and may contribute to chemotherapy-induced alterations of the marrow microenvironment.