Transforming growth factor (TGF)-β inhibits T cell proliferation and differentiation. TGF-β has been shown to inhibit the expression of transcription factors such as GATA-3 and T-bet that play important roles in T cell differentiation. Here we show that TGF-β inhibits T cell differentiation at a more proximal step. An early event during T cell activation is increased intracellular calcium levels. Calcium influx in activated T cells and the subsequent activation of transcription factors such as NFATc, events essential for T cell differentiation, are modulated by the Tec kinases that are downstream of the T cell receptor and CD28. We show that in stimulated CD4⁺ T cells, TGF-β inhibits phosphorylation and activation of the Tec kinase Itk, increase in intracellular Ca²⁺ levels, NFATc translocation, and activation of the mitogen-activated protein kinase ERK that together regulate T cell differentiation. Our studies suggest that by inhibiting Itk, and consequently Ca²⁺ influx, TGF-β limits T cell differentiation along both the Th1 and Th2 lineages.