Fibroblast growth factor 10 (FGF10) is a mesenchymal paracrine-acting factor that plays a key role in the organogenesis of the prostate, and Fgf10 transcripts exhibit a highly restricted expression pattern within prostatic mesenchyme. To study the regulation of Fgf10 we have used organ rudiments grown in vitro as well as a primary stromal cell system derived from the Ventral Mesenchymal Pad (VMP), a condensed area of mesenchyme known to induce prostatic organogenesis. Characterization of VMP cells (VMPC) showed that they retained expression of androgen receptor as well as transcripts for FGF10, TGFbeta1, 2, and 3. We propose that VMPC are a good model of specialized mesenchyme involved in prostatic organogenesis, and are distinct from general urogenital sinus mesenchyme/stroma. Treatment of VMPC with TGFbeta1 resulted in a rapid and transient decrease in Fgf10 transcript levels, which were reduced 9-fold at 3 h. TGFbeta1 also inhibited Fgf10 expression in VMP organ rudiments grown in vitro. To further analyze Fgf10 regulation, 6 kb of mouse genomic sequence 5' to the translation start site was characterized by promoter analysis. Deletion analysis of the Fgf10 promoter in VMPC identified a region of the promoter that mediated a significant proportion of promoter activity as well as mediating promoter downregulation by TGFbeta1. This element was located between nucleotides -182/-172, and contained a consensus Sp1 binding site. Taken together, our data suggest that TGFbeta1 is a regulator of Fgf10 expression in prostatic mesenchyme and that a proximal element within the Fgf10 promoter plays an important role in its regulation and expression.