The phosphorylation of Smad2 and Smad3 by the transforming growth factor (TGF)-beta-activated receptor kinases and their subsequent heterodimerization with Smad4 and translocation to the nucleus form the basis for a model how Smad proteins work to transmit TGF-beta signals. The transcriptional activity of Smad2-Smad4 or Smad3-Smad4 complexes can be limited by the corepressor Ski, which is believed to interact with Smad complexes on TGF-beta-responsive promoters and represses their ability to activate TGF-beta target genes by assembling on DNA a repressor complex containing histone deacetylase. Here we show that Ski can block TGF-beta signaling by interfering with the phosphorylation of Smad2 and Smad3 by the activated TGF-beta type I receptor. Furthermore, we demonstrate that overexpression of Ski induces the assembly of Smad2-Smad4 and Smad3-Smad4 complexes independent of TGF-beta signaling. The ability of Ski to engage Smad proteins in nonproductive complexes provides new insights into the molecular mechanism used by Ski for disabling TGF-beta signaling.