The multifunctional enzyme tissue transglutaminase (TG2) is reported to both mediate and inhibit tumour progression. To elucidate these different roles of TG2, we established a series of stable-transfected mouse colon carcinoma CT26 cells expressing a catalytically active (wild type) and a transamidating-inactive TG2 (Cys277Ser) mutant. Comparison of the TG2-transfected cells with the empty vector control indicated no differences in cell proliferation, apoptosis and susceptibility to doxorubicin, which correlated with no detectable changes in the activation of the transcription factor NF-jB. TG2-transfected cells showed increased expression of integrin b3, and were more adherent and less migratory on fibronectin than control cells. Direct interaction of TG2 with b3 integrins was demonstrated by immunoprecipitation, suggesting that TG2 acts as a coreceptor for fibronectin with b3 integrins. All cells expressed the same level of TGFb receptors I and II, but only cells transfected with active TG2 had increased levels of TGFb1 and matrix-deposited fibronectin, which could be inhibited by TG2 site-directed inhibitors. Moreover, only cells transfected with active TG2 were capable of inhibiting tumour growth when compared to the empty vector controls. We conclude that in this colon carcinoma model increased levels of active TG2 are unfavourable to tumour growth due to their role in activation of TGFb1 and increased matrix deposition, which in turn favours increased cell adhesion and a lowered migratory and invasive behaviour.