Human T-cell leukemia virus type 1 (HTLV-1) is an oncogenic retrovirus that is etiologically associated with adult T-cell leukemia. The HTLV-1 bZIP factor (HBZ), which is encoded by the minus strand of the provirus, is involved in both regulation of viral gene transcription and T-cell proliferation. We showed in this report that HBZ interacted with Smad2/3, and enhanced transforming growth factor-β (TGF-β)/Smad transcriptional responses in a p300-dependent manner. The N-terminal LXXLL motif of HBZ was responsible for HBZ-mediated TGF-β signaling activation. In a serial immunoprecipitation assay, HBZ, Smad3, and p300 formed a ternary complex, and the association between Smad3 and p300 was markedly enhanced in the presence of HBZ. In addition, HBZ could overcome the repression of the TGF-β response by Tax. Finally, HBZ expression resulted in enhanced transcription of Pdgfb, Sox4, Ctgf, Foxp3, Runx1, and Tsc22d1 genes and suppression of the Id2 gene; such effects were similar to those by TGF-β. In particular, HBZ induced Foxp3 expression in naive T cells through Smad3-dependent TGF-β signaling. Our results suggest that HBZ, by enhancing TGF-β signaling and Foxp3 expression, enables HTLV-1 to convert infected T cells into regulatory T cells, which is thought to be a critical strategy for virus persistence.