We have reported previously that PDK1 physically interacts with STRAP, a transforming growth factor-beta (TGF-beta) receptor-interacting protein, and enhances STRAP-induced inhibition of TGF-beta signaling. In this study we show that PDK1 coimmunoprecipitates with Smad proteins, including Smad2, Smad3, Smad4, and Smad7, and that this association is mediated by the pleckstrin homology domain of PDK1. The association between PDK1 and Smad proteins is increased by insulin treatment but decreased by TGF-beta treatment. Analysis of the interacting proteins shows that Smad proteins enhance PDK1 kinase activity by removing 14-3-3, a negative regulator of PDK1, from the PDK1-14-3-3 complex. Knockdown of endogenous Smad proteins, including Smad3 and Smad7, by transfection with small interfering RNA produced the opposite trend and decreased PDK1 activity, protein kinase B/Akt phosphorylation, and Bad phosphorylation. Moreover, coexpression of Smad proteins and wild-type PDK1 inhibits TGF-beta-induced transcription, as well as TGF-beta-mediated biological functions, such as apoptosis and cell growth arrest. Inhibition was dose-dependent on PDK1, but no inhibition was observed in the presence of an inactive kinase-dead PDK1 mutant. In addition, confocal microscopy showed that wild-type PDK1 prevents translocation of Smad3 and Smad4 from the cytoplasm to the nucleus, as well as the redistribution of Smad7 from the nucleus to the cytoplasm in response to TGF-beta. Taken together, our results suggest that PDK1 negatively regulates TGF-beta-mediated signaling in a PDK1 kinase-dependent manner via a direct physical interaction with Smad proteins and that Smad proteins can act as potential positive regulators of PDK1.