Casitas B-lineage lymphoma (CBL) protein family functions as multifunctional adaptor proteins and E3 ubiquitin ligases that are implicated as regulators of signaling in various cell types. Recent discovery revealed mutations of proto-oncogenic CBL in the linker region and RING finger domain in human acute myeloid neoplasm, and these transforming mutations induced carcinogenesis. However, the adaptor function of CBL mediated signaling pathway during tumorigenesis has not been well characterized. Here, we show that CBL is highly expressed in breast cancer cells and significantly inhibits transforming growth factor-β (TGF-β) tumor suppressive activity. Knockdown of CBL expression resulted in the increased expression of TGF-β target genes, PAI-I and CDK inhibitors such as p15(INK4b) and p21(Cip1). Furthermore, we demonstrate that CBL is frequently overexpressed in human breast cancer tissues, and the loss of CBL decreases the tumorigenic activity of breast cancer cells in vivo. CBL directly binds to Smad3 through its proline-rich motif, thereby preventing Smad3 from interacting with Smad4 and blocking nuclear translocation of Smad3. CBL-b, one of CBL protein family, also interacted with Smad3 and knockdown of both CBL and CBL-b further enhanced TGF-β transcriptional activity. Our findings provide evidence for a previously undescribed mechanism by which oncogenic CBL can block TGF-β tumor suppressor activity.