Smad proteins are intracellular signalling molecules and putative transcription factors that transduce signals elicited by members of the transforming growth factor beta (TGF-beta) superfamily. By comparing the expression of Smad1 and Smad2 during embryonic development, we show that mRNAs of both Smad isoforms are present in a variety of tissues. The major sites of expression of both Smads can be correlated with the expression domains of several members of the TGF-beta superfamily. Our expression data suggest that Smad proteins are involved in organ development, particularly that of organs arising from mesenchymal-epithelial interactions. A second site of strong expression is the central nervous system. Transcriptional control mediated by Smad1 and Smad2, therefore, may exert an important function in differentiation processes of embryonic development that are controlled by ligands of the TGF-beta superfamily.