Resistance to growth suppression by TGF-beta1 is common in cancer; however, mutations in this pathway are rare in hematopoietic malignancies. In multiple myeloma, a fatal cancer of plasma cells, malignant cells accumulate in the TGF-beta-rich bone marrow due to loss of both cell cycle and apoptotic controls. Herein we show that TGF-beta activates Smad2 but fails to induce cell cycle arrest or apoptosis in primary bone marrow myeloma and human myeloma cell lines due to its inability to activate G(1) cyclin-dependent kinase (CDK) inhibitors (p15(INK4b), p21(CIP1/WAF1), p27(KIP1), p57(KIP2)) or to repress c-myc and Bcl-2 transcription. Correlating with aberrant activation of CDKs, CDK-dependent phosphorylation of Smad2 on Thr(8) (pT8), a modification linked to impaired Smad activity, is elevated in primary bone marrow myeloma cells, even in asymptomatic monoclonal gammopathy of undetermined significance. Moreover, CDK2 is the predominant CDK that phosphorylates Smad2 on T8 in myeloma cells, leading to inhibition of Smad2-Smad4 association that precludes transcriptional regulation by Smad2. Our findings provide the first direct evidence that pT8 Smad2 couples dysregulation of CDK2 to TGF-beta resistance in primary cancer cells, and they suggest that disruption of Smad2 function by CDK2 phosphorylation acts as a mechanism for TGF-beta resistance in multiple myeloma.