SMAD proteins have been identified as signalling mediators of the TGF-beta superfamily, which is involved in a range of biological activities including cell growth, morphogenesis, development and immune responses. Smad1, Smad2, Smad3 and Smad5 are ligand-specific: Smadl and Smad5 transduce signals from bone morphogenetic proteins, and Smad2 and Smad3 mediate signalling by TGF-beta and activin, whereas Smad4 acts as a common signalling component. For example, Smad2 is phosphorylated by the TGF-beta type I receptor upon ligand binding, forms a heteromer with Smad4, and then translocates into the nucleus where it activates transcription. Here we report the isolation of Smad6 in the mouse. Smad6 is quite different in structure from the other SMAD proteins, and forms stable associations with type I receptors. Smad6 interferes with the phosphorylation of Smad2 and the subsequent heteromerization with Smad4, but does not inhibit the activity of Smad3. Smad6 also inhibits the phosphorylation of Smad1 that is induced by the bone morphogenetic protein type IB receptor. These data indicate that signals of the TGF-beta superfamily are regulated both positively and negatively by members of the SMAD family.