Transforming growth factor beta (TGF-beta) is a potent inhibitor of cell proliferation and the loss of responsiveness to TGF-beta may contribute to the development of human cancers. In hepatocellular carcinomas, the potential role of TGF-beta signaling as a tumor suppressor pathway can be illustrated by the presence of mutations in genes encoding TGF-beta receptors or downstream components of this signaling such as Smad2. Although Smad2 is mutated in hepatocellular carcinomas, the alteration of TGF-beta signaling with respect to tumor progression remains to be established. Using the HepG2 hepatoma cells, we showed here that expression of Smad2.Q407R, a missense mutation found in human hepatocellular carcinoma, was less effective than expression of wild-type Smad2 in enhancing the ability of TGF-beta to induce transcription from the Mix.2 promoter. This effect was specifically associated with a decrease in the steady-state level of Smad2.Q407R, presumably because of an enhancement of its ubiquitination and degradation through the proteasome machinery. More importantly, we found that the unstability of Smad2.Q407R was reversed when this mutant undergoes homo-oligomerization with wild-type Smad2 or hetero-oligomerization with Smad3 within the cells. Therefore, our findings allowed us to propose a novel mechanism for suppression of the deleterious effect of a tumor-derived mutation of Smad2, which loss may lead to dysregulated cell proliferation during tumorigenesis.