Smads are pivotal intracellular nuclear effecters of transforming growth fa
ctor-beta (TGF-beta) family members. Ligand-induced activation of TGF-beta
family receptors with intrinsic serine/threonine kinase activity trigger ph
osphorylation of receptor-regulated Smads (R-Smads), whereas Smad2 and Smad
3 are phosphorylated by TGF-beta, and activin type I receptors, Smad1, Smad
5 and Smad8, act downstream of BMP type I receptors. Activated R-Smads form
heteromeric complexes with common-partner Smads (Co-Smads), e.g. Smad4, wh
ich translocate efficiently to the nucleus, where they regulate, in co-oper
ation with other transcription factors, coactivators and corepressors, the
transcription of target genes. Inhibitory Smads act in most cases in an opp
osite manner from R- and Co-Smads. Like other components in the TGF-beta fa
mily signaling cascade, Smad activity is intricately regulated. The multifu
nctional and context dependency of TGF-beta family responses are reflected
in the function of Smads as signal integrators. Certain Smads are somatical
ly mutated at high frequency in particular types of human cancers. Gene abl
ation of Smads in the mouse has revealed their critical roles during embryo
nic development. Here we review the latest advances in our understanding of
the Smad mechanism of action and their in vivo functions.