TGFbeta signaling is initiated when the type I receptor phosphorylates the MAD-related protein, Smad2, on C-terminal serine residues. This leads to Smad2 association with Smad4, translocation to the nucleus, and regulation of transcriptional responses. Here we demonstrate that Smad7 is an inhibitor of TGFbeta signaling. Smad7 prevents TGFbeta-dependent formation of Smad2/Smad4 complexes and inhibits the nuclear accumulation of Smad2. Smad7 interacts stably with the activated TGFbeta type I receptor, thereby blocking the association, phosphorylation, and activation of Smad2. Furthermore, mutations in Smad7 that interfere with receptor binding disrupt its inhibitory activity. These studies thus define a novel function for MAD-related proteins as intracellular antagonists of the type I kinase domain of TGFbeta family receptors.

The TGF-beta superfamily of proteins regulates many different biological processes, including cell growth, differentiation and embryonic pattern formation. TGF-beta-like factors signal across cell membranes through complexes of transmembrane receptors known as type I and type II serine/threonine-kinase receptors, which in turn activate the SMAD signalling pathway. On the inside of the cell membrane, a receptor-regulated class of SMADs are phosphorylated by the type-I-receptor kinase. In this way, receptors for different factors are able to pass on specific signals along the pathway: for example, receptors for bone morphogenetic protein (BMP) target SMADs 1, 5 and 8, whereas receptors for activin and TGF-beta target SMADs 2 and 3. Phosphorylation of receptor-regulated SMADs induces their association with Smad4, the 'common-partner' SMAD, and stimulates accumulation of this complex in the nucleus, where it regulates transcriptional responses. Here we describe Smurf1, a new member of the Hect family of E3 ubiquitin ligases. Smurf1 selectively interacts with receptor-regulated SMADs specific for the BMP pathway in order to trigger their ubiquitination and degradation, and hence their inactivation. In the amphibian Xenopus laevis, Smurf1 messenger RNA is localized to the animal pole of the egg; in Xenopus embryos, ectopic Smurf1 inhibits the transmission of BMP signals and thereby affects pattern formation. Smurf1 also enhances cellular responsiveness to the Smad2 (activin/TGF-beta) pathway. Thus, targeted ubiquitination of SMADs may serve to control both embryonic development and a wide variety of cellular responses to TGF-beta signals.