The Smad family of intracellular proteins mediates signals generated by activin and other transforming growth factor beta-related proteins via specific heteromeric complexes of transmembrane receptor serine kinases (1, 2). xSmad2 has been implicated as an activin signal mediator that may participate in transcriptional regulation (3, 4). We have employed an interaction cloning strategy to identify xSmad2-binding proteins and found that calmodulin directly associated with Smads. xSmad2, generated either by in vitro translation or by overexpression in COS cells, specifically bound to calmodulin-agarose; the association was calcium-dependent and required xSmad2 N-terminal residues. In the same assay, xSmad1 and hSmads 2, 3, and 4 also bound to calmodulin-agarose. Furthermore, a calmodulin antagonist, W13, increased expression of the activin-inducible transcriptional reporter, 3TP-Lux, whereas overexpression of calmodulin suppressed this reporter. These observations demonstrate that Smad proteins interact with calmodulin in a calcium-dependent way through conserved N-terminal amino acids and suggest a role for calmodulin in regulating Smad function.