Inactivation of the BRCA1 gene has been found to confer susceptibility to early-onset familial breast and ovarian cancers. BRCA1 regulates DNA repair, chromatin remodeling and affects gene transcription. Transforming growth factor-beta (TGFbeta) is a potent regulator of growth, apoptosis and invasiveness of tumor cells, including breast cancer cells. Here we show that Smad3 which is a component of the TGFbeta signaling pathway, forms a complex with BRCA1 in vitro and in vivo. The interaction is mediated by the MH1 domain of Smad3 and the C-terminal part of BRCA1. We observed a co-localization of Smad3 and BRCA1 in nuclear complexes. We also found that TGFbeta1/Smad3 counteracted BRCA1-dependent repair of DNA double-strand breaks in human breast epithelial cells, as evaluated by BRCA1 nuclear foci formation, single-cell gel electrophoresis and cell survival assays. Thus, TGFbeta1/Smad3 suppresses BRCA1-dependent DNA repair in response to a DNA damaging agent.