Transforming growth factor-beta (TGF-β) signals through receptor serine/threonine kinases and intracellular Smad effectors, regulating numerous epithelial cell processes. TGF-β plays a crucial role in the cancer initiation and progression through tumor cell autonomous signaling and interactions with tumor microenvironment, but is featured with a butterfly effect upon the stages of tumorigenesis. TGF-β signaling acts as a suppressor of epithelial cell tumorigenesis at early stages, but promotes tumor progression by enhancing migration, invasion, and survival of the tumor cells during the later stages. TGF-β signaling also cross-talks with other cell survival signaling pathways. Tumor microenvironment contains many distinct cell types, which substantially influences the tumor cell growth and survival, and the invasion and metastasis. TGF-β in the microenvironment, produced by cancer and/or stromal cells, is high and negatively correlates with disease progression and patient prognosis. Therefore, TGF-β may affect tumor progression by multiple mechanisms in addition to its direct action on tumor cells, and the diversities of TGF-β signaling in tumors imply a need for caution to TGF-β-targeted strategies of tumor prevention and/or therapeutics.