Although transforming growth factor-beta (TGF-beta) has been identified to mainly inhibit cell growth, the correlation of elevated TGF-beta with increasing serum prostate-specific antigen (PSA) levels in metastatic stages of prostate cancer has also been well documented. The molecular mechanism for these two contrasting effects of TGF-beta, however, remains unclear. Here we report that Smad3, a downstream mediator of the TGF-beta signaling pathway, functions as a coregulator to enhance androgen receptor (AR)-mediated transactivation. Compared with the wild-type AR, Smad3 acts as a strong coregulator in the presence of 1 nM 5alpha-dihydrotestosterone, 10 nM 17beta-estradiol, or 1 microM hydroxyflutamide for the LNCaP mutant AR (mtAR T877A), found in many prostate tumor patients. We further showed that endogenous PSA expression in LNCaP cells can be induced by 5alpha-dihydrotestosterone, and the addition of the Smad3 further induces PSA expression. Together, our findings establish Smad3 as an important coregulator for the androgen-signaling pathway and provide a possible explanation for the positive role of TGF-beta in androgen-promoted prostate cancer growth.