Squamous cell carcinoma (SCC) cells of the head and neck specifically express collagenase-3 (matrix metalloproteinase-13 (MMP-13)), the expression of which correlates with their invasion capacity. Transforming growth factor-beta (TGF-beta) enhances MMP-13 and collagenase-1 (MMP-1) expression and invasion of SCC cells via p38 mitogen-activated protein kinase. Here, we have examined the role of Smad signaling in regulating MMP-13 expression and in invasion of head and neck SCC cells. Treatment with TGF-beta resulted in activation of Smad2 and Smad3 in SCC cells, but had no effect on their proliferation or viability. Basal activation of Smad3 and p38 was noted in SCC cells without exogenous TGF-beta stimulation, and adenoviral delivery of Smad7 and dominant-negative Smad3 inhibited p38 activation in these cells. Adenoviral overexpression of Smad3 augmented the upregulatory effect of TGF-beta on MMP-13 expression by SCC cells. Disruption of Smad signaling by adenoviral expression of kinase-defective TGF-beta type I receptor (activin-receptor-like kinase-5), Smad7, and dominant-negative Smad3 potently suppressed the basal and TGF-beta-induced expression of MMP-13 and MMP-1 in SCC cells, and inhibited their basal and TGF-beta-induced invasion through Matrigel and type I collagen. Adenoviral overexpression of Smad7 in cutaneous and oral SCC cells significantly inhibited their implantation in skin of SCID mice and growth of xenografts in vivo, as compared to LacZ adenovirus-transduced control cells. Together, these results show that Smad signaling plays an important role in promoting the invasive phenotype of human head and neck SCC cells by upregulating their collagenase expression.