In our previous study, we demonstrated that bone marrow-derived mononuclear cells (BM MNCs) secrete copious amounts of Transforming Growth Factor β1 (TGFβ1) in response to erythropoietin (EPO). In this study, we investigated the principal cell type involved in the process. We found that a large percentage of various marrow cells, but not their mature counterparts present in the peripheral blood, express EPO-R. Cell depletion experiments showed that removing Glycophorin positive erythroblasts and CD41+ megakaryocytes – the prime suspects – did not affect the EPO-mediated TGFβ1 secretion by the BM MNCs. However, individual depletion of CD2+ T lymphocytes, CD14+ monocyte/macrophages, and CD19+ B cells affected the TGFβ1 secretion by EPO-primed MNCs: depletion of CD2+ cells had the most striking effect. Unexpectedly, and most interestingly, depletion of CD15+ granulocytes led to a significant increase in the TGFβ1 secretion by both naïve and EPO-primed BM MNCs, suggesting that these cells negatively regulate the process. Mechanistically, we show that the CD15+ cells exert this regulatory effect via secretion of both full-length and soluble EPO-R in the milieu. Overall our results, for the first time, unravel an in-built regulatory mechanism prevailing in the BM microenvironment that regulates the secretion of TGFβ1 by controlling EPO-EPO-R interaction. Our data could be relevant in understanding the pathophysiology of several conditions associated with deregulated production of TGFβ1 in the marrow compartment.