The major Smad pathways serve in regulating the expression of genes downstream of TGFbeta signals. In this study, we examined the effects of sustained Smad7 expression in cultured cells. Interestingly, Smad7 caused various mesenchymal cells, including NIH3T3 fibroblast and ST2 bone-marrow stromal cells, to undergo a marked morphological alteration into a flattened cell shape, but kept them alive for as long as 60 days. Furthermore, Smad7 arrested the proliferation of the cells even before they reached confluence. These cells became quiescent in G0/G1 phase and accumulated a hypophosphorylated form of retinoblastoma. The cytostatic effect of Smad7 was closely associated with a preceding decrease in the levels of G1 cyclins, such as cyclin D1 and cyclin E. Accordingly, ectopic cyclin E was able to overcome the Smad7-induced arrest of proliferation. These results indicate that Smad7 functions upstream of G1 cyclins and suggest a novel role for Smad7 as an antiproliferative factor. In contrast to the growth of mesenchymal cells, that of epithelial cells was little susceptible to Smad7. The present findings raise the possibility that a link between Smad7 and the G1 to S phase transition may also contribute to the cell cycle control by certain Smad7-inducing stimuli in a cell-type-dependent fashion.