Disruptions to the TGFβ signaling pathway have been implicated in most human adenocarcinomas. In addition to its role in cancer cell migration and metastasis, TGFβ has been implicated in tumor‐mediated immunosuppression. Membrane‐bound TGFβ has previously been reported to be expressed on a subset of regulatory T cells and was shown to be critical to their immune suppressive function. In the present study, we document expression of a signaling competent, endogenously derived form of cell surface‐bound TGFβ on colorectal cancer cells. While antibodies against only the mature form of TGFβ failed to label cells, surface‐bound TGFβ was clearly detected by antibodies specific for both the latent and mature forms of the cytokine. Confirming the notion that the surface TGFβ was in latent form, brief acid pulsing of the cells increased the amount of detectable membrane‐associated TGFβ. In coculture assays, this cell‐bound TGFβ could be activated and utilized in a paracrine fashion both by other cancer cells and by CD8⁺ intraepithelial lymphocytes. This effect was abrogated by the use of a furin inhibitor which decreased the membranous expression of TGFβ on the tumor cells. Signaling competent membrane‐bound TGFβ on cancer cells is thus likely to be a key player in regulating tumor cell interactions with each other as well as with other cells in their microenvironment. © 2007 Wiley‐Liss, Inc.