Transforming growth factor βs (TGF‐βs) are the potent growth inhibitors for various cell types. Certain transformed cells, however, show poor response to TGF‐β–induced growth inhibition, which contributes to their uncontrolled proliferation. Recently, we have reported that TGF‐β1 induces degradation of activated Src tyrosine kinase in rat fibroblasts. To elucidate the alteration in TGF‐β signaling pathway in tumor cells that cannot respond to the cytokine, we compared the effects of TGF‐β1 on Src kinase in two human hepatoma cell lines, TGF‐β1–insensitive Mahlavu cells and TGF‐β1–sensitive HepG2 cells. TGF‐β1 decreased Src kinase activity in HepG2 cells, but increased cellular Src levels and Src kinase activity in Mahlavu cells. Co‐incubation of Mahlavu cells with TGF‐β1 and 12‐O‐tetradecanoyl phorbol 13‐acetate (TPA) decreased Src protein levels and Src kinase activity, inducing TGF‐β1sensitivity. TGF‐β1 induced tyrosine dephosphorylation of Ras guanosine triphosphatase–activating protein (Ras‐GAP) and Ras inactivation in HepG2 cells, but induced Ras‐GAP phosphorylation and Ras activation in Mahlavu cells. The Src kinase inhibitor abolished the increase of Src kinase activity in TGF‐β1–treated Mahlavu cells, and induced TGF‐β1 sensitivity. These findings suggest that regulation of Src kinase by TGF‐β1is altered in Mahlavu cells. The altered regulation of Src may contribute to TGF‐β1 insensitivity in this cell line, at least in part through activation of Ras.