The large transforming growth factor-beta (TGFbeta) superfamily of secreted proteins regulate the growth, development and differentiation of cells in diverse organisms, including nematode worms, flies, mice and humans. Signals are initiated upon binding of TGFbeta superfamily members to cell-surface serine/threonine kinase receptors and are then propagated by the intracellular mediators known as Smads. Activation of Smads results in their translocation from the cytoplasm into the nucleus, where they activate or repress transcription together with transcription factors so as to regulate target gene expression. Most Smads consist of two conserved domains. Mad homology (MH) domains I and 2, which are separated by a non-conserved linker region. These domains lack enzymatic activity and, instead, Smads mediate their effects through protein-protein and protein-DNA interactions. Targeted disruption of Smad genes in mice has revealed their importance in embryonic development, and a tumor-suppressor role for Smads in human cancers has been described. Smads therefore play an essential role in mediating TGFbeta-superfamily signals in development and disease.