Proteins of the transforming growth factor beta(TGFbeta) superfamily regulate diverse cellular responses, including cell growth and differentiation. After TGFbeta stimulation, receptor-associated Smads are phosphorylated and form a complex with the common mediator Smad4. Here, we report the cloning of SMIF, a ubiquitously expressed, Smad4-interacting transcriptional co-activator. SMIF forms a TGFbeta/bone morphogenetic protein 4 (BMP4)-inducible complex with Smad4, but not with others Smads, and translocates to the nucleus in a TGFbeta/BMP4-inducible and Smad4-dependent manner. SMIF possesses strong intrinsic TGFbeta-inducible transcriptional activity, which is dependent on Smad4 in mammalian cells and requires p300/CBP. A point mutation in Smad4 abolished binding to SMIF and impaired its activity in transcriptional assays. Overexpression of wild-type SMIF enhanced expression of TGFbeta/BMP regulated genes, whereas a dominant-negative SMIF mutant suppressed expression. Furthermore, dominant-negative SMIF is able to block TGFbeta-induced growth inhibition. In a knockdown approach with morpholino-antisense oligonucleotides targeting zebrafish SMIF, severe but distinct phenotypic defects were observed in zebrafish embryos. Thus, we propose that SMIF is a crucial activator of TGFbeta signalling.