Transforming growth factor-β1 (TGF-β1) has a distinct role in renal fibrosis associated with epithelial-mesenchymal transition (EMT) of the renal tubules and synthesis of extracellular matrix. Smad3 plays an essential role in fibrosis initiated by EMT. Phosphorylation of Smad3 in the C-terminal SSXS motif by type I TGF-β receptor kinase is essential for mediating TGF-β response. Smad3 activity is also regulated by phosphorylation in the linker region. However, the functional role of Smad3 linker phosphorylation is not well characterized. We now show that Smad3 EPSM mutant, which mutated the four phosphorylation sites in the linker region, markedly enhanced TGF-β1-induced EMT of Smad3-deficient primary renal tubular epithelial cells, whereas Smad3 3S-A mutant, which mutated the C-terminal phosphorylation sites, was unable to induce EMT in response to TGF-β1. Furthermore, immunoblotting and RT-PCR analysis showed a marked induction of fibrogenic gene expression with a significant reduction in E-cadherin in HK2 human renal epithelial cells expressing Smad3 EPSM. TGF-β1 could not induce the expression of α-SMA, vimentin, fibronectin and PAI-1 or reduce the expression of E-cadherin in HK2 cells expressing Smad3 3S-A in response to TGF-β1. Our results suggest that Smad3 linker phosphorylation has a negative regulatory role on Smad3 transcriptional activity and TGF-β1/Smad3-induced renal EMT. Elucidation of mechanism regulating the Smad3 linker phosphorylation can provide a new strategy to control renal fibrosis.