The transforming growth factors beta control a diversity of biological processes including cellular proliferation, differentiation, apoptosis, and extracellular matrix production, and are critical effectors of embryonic patterning and development, including that of the orofacial region. TGFbeta superfamily members signal through specific cell surface receptors that phosphorylate the cytoplasmic Smad proteins, resulting in their translocation to the nucleus and interaction with promoters of TGFbeta-responsive genes. Subsequent alterations in transcription are cell type-specific and dependent on recruitment to the Smad/transcription factor complex of coactivators, such as CBP and p300, or corepressors, such as c-ski and SnoN. Since the affinity of Smads for DNA is generally low, additional accessory proteins that facilitate Smad/DNA binding are required, and are often cell- and tissue-specific. In order to identify novel Smad 3 binding proteins in developing orofacial tissue, a yeast two hybrid assay was employed in which the MH2 domain of Smad 3 was used to screen an expression library derived from mouse embryonic orofacial tissue. The RNA helicase, p68, was identified as a unique Smad binding protein, and the specificity of the interaction was confirmed through various in vitro and in vivo assays. Co-expression of Smad 3 and a CBP-Gal4 DNA binding domain fusion protein in a Gal4-luciferase reporter assay resulted in increased TGFbeta-stimulated reporter gene transcription. Moreover, co-expression of p68 RNA helicase along with Smad 3 and CBP-Gal4 resulted in synergistic activation of Gal4-luciferase reporter expression. Collectively, these data indicate that the RNA helicase, p68, can directly interact with Smad 3 resulting in formation of a transcriptionally active ternary complex containing Smad 3, p68, and CBP. This offers a means of enhancing TGFbeta-mediated cellular responses in developing orofacial tissue.