The inhibitory Smads (I-Smads), i.e. Smad6 and Smad7, are negative regulators of transforming growth factor- (TGF-) family signaling. I-Smads inhibit TGF- family signaling principally through physical interaction with type I receptors (activin receptor-like kinases), so as to compete with receptorregulated Smads (R-Smads) for activation. However, how I-Smads interact with type I receptors is not well understood. In the present study, we found that Smad7 has two modes of interaction with type I receptors. One is through a three-finger-like structure in the MH2 domain, consisting of residues 331-361, 379 -387, and the L3 loop. The other is through a basic groove in the MH2 domain (Mochizuki, T., Miyazaki, H., Hara, T., Furuya, T., Imamura, T., Watabe, T., and Miyazono, K. (2004) J. Biol. Chem. 279, 31568 -31574). We also found that Smad6 principally utilizes a basic groove in the MH2 domain for interaction with type I receptors. Smad7 thus has an additional mode of interaction with TGF- family type I receptors not possessed by Smad6, which may play roles in mediating the inhibitory effects unique to Smad7.