Transforming growth factor-beta (TGF-beta) superfamily members are multifunctional cytokines that exert their effects via heteromeric complexes of two distinct serine and threonine kinase receptors. Drosophila mothers against decapentaplegic and related genes in Caenorhabditis elegans, Xenopus, and mammals were shown to function downstream in the intracellular signaling pathways of TGF-beta superfamily members. Here we report the cloning of a Mad-related protein, termed Sma- and Mad-related protein 2 (Smad2). TGF-beta stimulated the phosphorylation and nuclear translocation of Smad2 in nontransfected Mv1Lu cells. In addition, we demonstrated that TGF-beta and activin mediated phosphorylation of Smad2 after its overexpression with appropriate type I and II receptors in COS cells. Smad2 and Smad1 were found to be broadly expressed in human tissues. Smad2 is closely linked to DPC4 on chromosome 18q21.1, a region often deleted in human cancers. Cells that lack Smad2 may escape from TGF-beta-mediated growth inhibition and promote cancer progression.