Transforming growth factor beta (TGF-beta) family ligands are pleotropic 
proteins with diverse cell-type-specific effects on growth and differentiation. 
For example, PAK2 activation is critical for the proliferative/profibrotic 
action of TGF-beta on mesenchymal cells, and yet it is not responsive to 
TGF-beta in epithelial cells. We therefore investigated the regulatory 
constraints that prevent inappropriate PAK2 activation in epithelial cultures. 
The results show that the epithelial-enriched protein Erbin controls the 
function of the NF2 tumor suppressor Merlin by determining the output of 
Merlin's physical interactions with active PAK2. Whereas mesenchymal TGF-beta 
signaling induces PAK2-mediated inhibition of Merlin function in the absence of 
Erbin, Erbin/Merlin complexes bind and inactivate GTPase-bound PAK2 in 
epithelia. These results not only identify Erbin as a key determinant of 
epithelial resistance to TGF-beta signaling, they also show that Erbin controls 
Merlin tumor suppressor function by switching the functional valence of PAK2 
binding.