Smad7 is an inhibitor of the transforming growth factor-β-activated signaling pathway. Under welloxygenated conditions, Smad7 is a potent inhibitor of carcinoma cell invasion. Paradoxically, however, the expression of Smad7 is upregulated across several cancers and may promote cancer progression. Hypoxia, which is frequently met in solid tumors, is an enhancer of carcinoma cell invasion and cancer progression. Here, we report that hypoxia activates the expression of Smad7 in a hypoxia-inducible factor-and von HippelLindau protein-dependent manner. As expected, in normoxia, the forced expression of Smad7 inhibited carcinoma cell invasion. In contrast with the normoxic condition, the inhibitory effect of Smad7 was lost under hypoxia. The block in carcinoma cell invasion by forced expression of Smad7 was released by hypoxia in two invasive carcinoma cell lines. Moreover, the noninvasive HaCaT keratinocytes become invasive upon simultaneous hypoxia and transforming growth factor-β stimulus. The hypoxia-activated invasion was attenuated by inhibiting Smad7 expression by short interfering RNA. Finally, the increased Smad7 expression in human carcinomas correlated with hypoxic gene expression. The data provide evidence that hypoxia could convert Smad7 function from an invasion inhibitor into an activator of invasion. Furthermore, they might shed light as to why increased Smad7 expression is detected in cancers. Cancer Res; 70(14); 5984-93. ©2010 AACR.