The transforming growth factor-beta (TGF-beta) superfamily of growth factors and cytokines has been implicated in a variety of physiological and developmental processes within the cardiovascular system. Smad proteins are a recently described family of intracellular signaling proteins that transduce signals in response to TGF-beta superfamily ligands. We demonstrate by both a mammalian two-hybrid and a biochemical approach that human Smad2 and Smad4, two essential Smad proteins involved in mediating TGF-beta transcriptional responses in endothelial and other cell types, can functionally interact with the transcriptional coactivator CREB binding protein (CBP). This interaction is specific in that it requires ligand (TGF-beta) activation and is mediated by the transcriptional activation domains of the Smad proteins. A closely related, but distinct endothelial-expressed Smad protein, Smad7, which does not activate transcription in endothelial cells, does not interact with CBP. Furthermore, Smad2,4-CBP interactions involve the COOH terminus of CBP, a region that interacts with other regulated transcription factors such as certain signal transduction and transcription proteins and nuclear receptors. Smad-CBP interactions are required for Smad-dependent TGF-beta-induced transcriptional responses in endothelial cells, as evidenced by inhibition with overexpressed 12S E1A protein and reversal of this inhibition with exogenous CBP. This report demonstrates a functional interaction between Smad proteins and an essential component of the mammalian transcriptional apparatus (CBP) and extends our insight into how Smad proteins may regulate transcriptional responses in many cell types. Thus, functional Smad-coactivator interactions may be an important locus of signal integration in endothelial cells.