LIM-only protein 4 (LMO4) plays critical roles in mammalian development, and has been proposed to play roles in epithelial oncogenesis, including breast cancer. As LMO4 is highly expressed in the epithelial compartments at locations of active mesenchymal-epithelial interactions, we reasoned that LMO4 might act by modulating signaling pathways involved in mesenchymal-epithelial signaling. One such candidate signal is the transforming growth factor-b (TGFb) cytokine pathway, which plays important roles both in development and cancer. We show here that the transcriptional response to TGFb in epithelial cells is sensitive to LMO4 levels; both up-and downregulation of LMO4 can enhance TGFb signaling as assessed by a TGFb-responsive reporter gene. Furthermore, LMO4 can interact with the MH1 and linker domains of receptor-mediated Smad proteins, and associate with the endogenous TGFb-responsive Plasminogen Activator Inhibitor-1 gene promoter in a TGFb-dependent manner, suggesting that such interactions may mediate the effects of LMO4 on TGFb signaling. When introduced into mammary epithelial cells, LMO4 potentiated the growth-inhibitory effects of TGFb in those cells. These results define a new function for LMO4 as a coactivator in TGFb signaling, and provide a potential novel mechanism for LMO4-mediated regulation in development and oncogenesis.