Chronic allograft rejection (CR) is the leading cause of late graft failure following organ transplantation. CR is a progressive disease, characterized by deteriorating graft function, interstitial fibrosis, cardiac hypertrophy, and occlusive neointima development. TGFbeta, known for its immunosuppressive qualities, plays a beneficial role in the transplant setting by maintaining alloreactive T cells in a hyporesponsive state, but has also been implicated in promoting graft fibrosis and CR. In the mouse vascularized cardiac allograft model, transient depletion of CD4(+) cells promotes graft survival but leads to CR, which is associated with intragraft TGFbeta expression. Decorin, an extracellular matrix protein, inhibits both TGFbeta bioactivity and gene expression. In this study, gene transfer of decorin into cardiac allografts was used to assess the impact of intragraft TGFbeta neutralization on CR, systemic donor-reactive T cell responses, and allograft acceptance. Decorin gene transfer and neutralization of TGFbeta in cardiac allografts significantly attenuated interstitial fibrosis, cardiac hypertrophy, and improved graft function, but did not result in systemic donor-reactive T cell responses. Thus, donor-reactive T and B cells remained in a hyporesponsive state. These findings indicate that neutralizing intragraft TGFbeta inhibits the cytokine's fibrotic activities, but does not reverse its beneficial systemic immunosuppressive qualities.