Chronic allograft rejection manifested as obliterative bronchiolitis (OB) remains the single greatest impediment to long-term survival after lung transplantation. Transforming growth factor-1 (TGF-1) has been implicated in the tissue remodeling response associated with OB. Therefore, its intracellular signal transducer, Smad3, is a prime target of investigation. Herein, we examine the role of TGF-1, through Smad3, in the development of OB using heterotopic tracheal transplantation in wild-type and Smad3-null mice. TGF-1 was detectable within infiltrating mononuclear cells early after transplantation. Throughout the last 20 years, lung transplantation has evolved into an accepted treatment option for patients with end-stage lung disease because of emphysema, pulmonary fibrosis, pulmonary hypertension, and cystic fibrosis. 1 However, chronic allograft rejection manifested as obliterative bronchiolitis (OB) remains the major obstacle to long-term survival after lung transplantation. 2 Clinically, OB is characterized by airflow limitation, defined by a 20% decline in forced expiratory volume in 1 second (FEV 1 ), and is often complicated by recurrent lower respiratory tract infections. The histological hallmark of OB is the presence of obstructing intraluminal polyps comprised of fibromyxoid granulation tissue and plaques of dense submucosal eosinophilic scar on lung biopsy. OB can complicate up to 60% of lung allografts and becomes increasingly prevalent the further removed from the transplant operation. 3 Progressive OB ultimately results in worsening hypoxemia and death.Many studies on the pathogenesis of OB have concentrated on the role of cellular allogenic immune responses during OB development. However, fibroproliferation and tissue remodeling clearly play an important role in its pathogenesis because OB is characterized by the accumulation of fibroblasts and the excessive deposition of connective tissue matrix within the lumen of the affected bronchioles. The factors that initiate and maintain fibroproliferation and tissue remodeling within the airway lumen in OB have not been fully elucidated. One candidate factor is transforming growth factor (TGF)-, a pleiotropic cytokine with potent profibrotic activities. 4 Extensively studied in solid organ transplantation, TGF- has been found to have beneficial effects on alloimmunity. For instance, overexpression of a TGF- transgene leads to marked reductions in acute rejection and prolongation of graft survival in experimental heart and