Alzheimer's disease (AD) is a neurodegenerative disorder, due to excess amyloid-beta peptide (Abeta). TGF-beta1 and beta-catenin signaling pathways have been separately implicated in modulating Abeta-neurotoxicity. However, the underlying mechanisms remain unclear. Here, we report that TGF-beta1 and nuclear Smad7 and beta-catenin levels were markedly upregulated in cortical brain regions of the TgCRND8 mice, a mouse model of familial Alzheimer's disease. Coimmunoprecipitation of cortical brain tissue lysates revealed an interaction between Smad7 and beta-catenin. This interaction which was significantly enhanced in the TgCRND8 mice was also associated with an increase in TCF/LEF DNA-shift binding activity. TCF/LEF reporter gene activity was significantly increased in mouse primary cortical neuronal cultures (MCN) from the TgCRND8 mice, compared to controls. Interestingly, exposure of MCN to Abeta(1-42) led to an increase in TGF-beta1 and nuclear levels of both beta-catenin and Smad7. Furthermore, addition of TGF-beta1 to the MCN caused an increase in apoptosis and Smad7 levels. When Smad7 or beta-catenin levels were reduced by siRNA, TGF-beta1-induced apoptosis was suppressed, indicating that both Smad7 and beta-catenin are required for TGF-beta1-induced neurotoxicity. Since Abeta(1-42)-induced TGF-beta1, we suggest that TGF-beta1 may amplify Abeta(1-42)-mediated neurodegeneration in AD via Smad7 and beta-catenin interaction and nuclear localization.