The transforming growth factor-beta (TGF-beta) family of cytokines regulates diverse cellular processes through control of the expression of target genes. Smad proteins are a recently identified family of signal transducers for members of the TGF-beta family. Smads act as transcriptional regulators through binding to DNA and interacting with a variety of transcription factors. Here, we identified a kappaB site as a TGF-beta-responsive region in the 3'-downstream junB promoter region. We also demonstrate that kappaB sites alone are sufficient to mediate immediate transcriptional activation by TGF-beta. Transactivation of kappaB sites by TGF-beta requires an intact NF-kappaB pathway, cooperates with known activators of this pathway, and is mediated by Smad family members. Furthermore, we show that Smad3 interacts with p52 in vivo. These data expand the model in which Smad proteins undergo multiple interactions with several transcription factors that could induce either activation or repression of gene expression.