Smad1, Smad5 and Smad9 (also known as Smad8) are activated by phosphorylation by bone morphogenetic protein (BMP)-bound type I receptor kinases. We examined the role of Smad1, Smad5, and Smad9 by creating constitutively active forms (Smad(DVD)). Transcriptional activity of Smad9(DVD) was lower than that of Smad1(DVD) or Smad5(DVD), even though all three Smad(DVD)s associated with Smad4 and bound to the target DNA. The linker region of Smad9 was sufficient to reduce transcriptional activity. Smad9 expression was increased by the activation of BMP signaling, similar to that of inhibitory Smads (I-Smads), and Smad9 reduced BMP activity. In contrast to I-Smads, however, Smad9 did not inhibit the type I receptor kinase and suppressed the constitutively active Smad1(DVD). Smad9 formed complexes with Smad1 and bound to DNA but suppressed the transcription of the target gene. Taken together, our findings suggest that Smad9 is a new type of transcriptional regulator in BMP signaling.