Ionizing radiation causes DNA damage that elicits a cellular program of damage control coordinated by the kinase activity of ataxia telangiectasia mutated protein (ATM). Transforming growth factor beta (TGFbeta)-1, which is activated by radiation, is a potent and pleiotropic mediator of physiologic and pathologic processes. Here we show that TGFbeta inhibition impedes the canonical cellular DNA damage stress response. Irradiated Tgfbeta1 null murine epithelial cells or human epithelial cells treated with a small-molecule inhibitor of TGFbeta type I receptor kinase exhibit decreased phosphorylation of Chk2, Rad17, and p53; reduced gammaH2AX radiation-induced foci; and increased radiosensitivity compared with TGFbeta competent cells. We determined that loss of TGFbeta signaling in epithelial cells truncated ATM autophosphorylation and significantly reduced its kinase activity, without affecting protein abundance. Addition of TGFbeta restored functional ATM and downstream DNA damage responses. These data reveal a heretofore undetected critical link between the microenvironment and ATM, which directs epithelial cell stress responses, cell fate, and tissue integrity. Thus, Tgfbeta1, in addition to its role in homoeostatic growth control, plays a complex role in regulating responses to genotoxic stress, the failure of which would contribute to the development of cancer; conversely, inhibiting TGFbeta may be used to advantage in cancer therapy.