Hepatocyte growth factor (HGF) is a potent antifibrotic cytokine that blocks tubular epithelial to mesenchymal transition (EMT) induced by TGF-beta1. However, the underlying mechanism remains largely unknown. This study investigated the signaling events that lead to HGF blockade of the TGF-beta1-initiated EMT. Incubation of human kidney epithelial cells HKC with HGF only marginally affected the expression of TGF-beta1 and its type I and type II receptors, suggesting that disruption of TGF-beta1 signaling likely plays a critical role in mediating HGF inhibition of TGF-beta1 action. However, HGF neither affected TGF-beta1-induced Smad-2 phosphorylation and its subsequent nuclear translocation nor influenced the expression of inhibitory Smad-6 and -7 in tubular epithelial cells. HGF specifically induced the expression of Smad transcriptional co-repressor SnoN but not Ski and TG-interacting factor at both mRNA and protein levels in HKC cells. SnoN physically interacted with activated Smad-2 by forming transcriptionally inactive complex and overrode the profibrotic action of TGF-beta1. In vivo, HGF did not affect Smad-2 activation and its nuclear accumulation in tubular epithelium, but it restored SnoN protein abundance in the fibrotic kidney in obstructive nephropathy. Hence, HGF blocks EMT by antagonizing TGF-beta1's action via upregulating Smad transcriptional co-repressor SnoN expression. These findings not only identify a novel mode of interaction between the signals activated by HGF receptor tyrosine kinase and TGF-beta receptor serine/threonine kinases but also illustrate the feasibility of confining Smad activity as an effective strategy for blocking renal fibrosis.