Smad4 is an intracellular transmitter of TGF-beta signals and its tumor suppressor function is presumed to reside in its capacity to mediate TGF-beta-induced growth inhibition. However, there is accumulating evidence that this hypothesis may be too simple. The roles of TGF-beta in carcinogenesis are complex and also comprise tumor promoting functions particularly in late stage carcinogenesis. Importantly, functional inactivation of Smad4 in colon carcinomas frequently occurs at late stages when tumors acquire invasive and metastatic capabilities. We have previously reported that stable re-expression of Smad4 in SW480 human colon carcinoma cells was adequate to suppress tumor growth in nude mice. However, it did not affect cell growth in vitro nor did it restore TGF-beta responsiveness. Here, we report that Smad4 transcriptionally induced classical cadherins including the invasion suppressor E-cadherin, presumably re-establishing epithelial morphology. Smad4-induced cadherins were able to recruit catenins to the plasma membrane and were functionally active in cell-cell adhesion. These results indicate a novel pathway of Smad4-mediated tumor suppression and suggest that Smad4 in colon cells may be involved in the maintenance of epithelial traits.