Abstract Transforming growth factor-β (TGF-β) family members, including TGF-βs and bone morphogenetic proteins (BMPs), play important roles in directing the fate of stem cells. In embryonic stem cells, the TGF-β superfamily participates in almost all stages of cell development, such as cell maintenance, lineage selection, and progression of differentiation. In adult mesenchymal stem cells (MSCs), TGF-βs can provide competence for early stages of chondroblastic and osteoblastic differentiation, but they inhibit myogenesis, adipogenesis, and late-stage osteoblast differentiation. BMPs also inhibit adipogenesis and myogenesis, but they strongly promote osteoblast differentiation. The TGF-β superfamily members signal via specific serine/threonine kinase receptors and their nuclear effectors termed Smad proteins as well as through non-Smad pathways, which explain their pleiotropic effects in self-renewal and differentiation of stem cells. This review summarizes the current knowledge on the pleiotropic effects of the TGF-β superfamily of growth factors on the fate of stem cells and also discusses the mechanisms by which the TGF-β superfamily members control embryonic and MSCs differentiation.