We previously demonstrated that retinoid-induced inhibition of chondrogenesis in the forelimb bud may be mediated by TGF-β2 (1). The present study was conducted to examine whether TGF-β2 is involved in the inhibition of forelimb bud development caused by all-trans-retinoic acid (RA). Expression of TGF-β2 was examined immunohistochemically in forelimb buds of embryos 24 h after dosing to the mother on Day 12 of gestation in the rat. In the control and 50 mg/kg group, TGF-β2 was expressed in the epithelium and prechondrogenic area around dead cells in the forelimb bud. In the 100 mg/kg group, a dose at which RA caused reduction defects of forearm bones, TGF-β2 expression was observed in the distal margin of forelimb buds, in which no expression was observed in the control and 50 mg/kg group. Immunohistologic studies also indicated that in the 100 mg/kg group, the expression of TGF-β2 was enhanced in forearm-bone prechondrocytes around the dead cells. In a whole embryo culture system, exposure to RA for 24 h reduced the proximodistal length and protein content in forelimb buds at concentrations of 3 μg/mL or more. The whole embryo culture system also showed that the expression of TGF-β2 was induced at the concentration of 3 μg/mL in the same region as found in forelimb buds of embryos from dams administered a teratogenic dosage of RA in vivo. Local application of TGF-β2 to the distal margin of the forelimb bud in Day 12 embryos reduced proximodistal growth and protein content in forelimb buds for 24 h in culture even without RA treatment. We also found that exogenous TGF-β2 inhibited DNA synthesis of forelimb bud cells in culture in a concentration-dependent manner. Neutralization of TGF-β2 with its antibody in the distal margin of forelimb buds partially prevented the RA-induced inhibition of forelimb bud growth in the whole embryo culture system. These results suggest that RA-induced TGF-β2 in the distal margin of forelimb buds may be involved in RA-induced inhibition of forelimb bud growth via reduction of cell proliferation in the distal margin, and RA-induced TGF-β2 in the prechondrogenic area may inhibit chondrogenesis in the future forearm bones, followed by reduction defects of the forearm bones.