Transforming growth factor (TGF)-beta can suppress and promote breast cancer progression. How TGF-beta elicits these dichotomous functions and which roles the principle intracellular effector proteins Smad2 and Smad3 have therein, is unclear. Here, we investigated the specific functions of Smad2 and Smad3 in TGF-beta-induced responses in breast cancer cells in vitro and in a mouse model for breast cancer metastasis. We stably knocked down Smad2 or Smad3 expression in MDA-MB-231 breast cancer cells. The TGF-beta-induced Smad3-mediated transcriptional response was mitigated and enhanced by Smad3 and Smad2 knockdown, respectively. This response was also seen for TGF-beta-induced vascular endothelial growth factor (VEGF) expression. TGF-beta induction of key target genes involved in bone metastasis, were found to be dependent on Smad3 but not Smad2. Strikingly, whereas knockdown of Smad3 in MDA-MB-231 resulted in prolonged latency and delayed growth of bone metastasis, Smad2 knockdown resulted in a more aggressive phenotype compared with control MDA-MB-231 cells. Consistent with differential effects of Smad knockdown on TGF-beta-induced VEGF expression, these opposing effects of Smad2 versus Smad3 could be directly correlated with divergence in the regulation of tumor angiogenesis in vivo. Thus, Smad2 and Smad3 differentially affect breast cancer bone metastasis formation in vivo.