Human T-cell leukemia virus I is the etiologic agent of adult T-cell leukemia (ATL), an aggressive T-cell malignancy. The viral oncoprotein Tax, through the activation of nuclear factorkappaB (NF-kappaB), CCAAT-enhancer binding protein (CREB), and activated protein-1 (AP-1) pathways, is a transcriptional regulator of critical genes for T-cell homeostasis. In ATL cells, activated AP-1 complexes induce the production of transforming growth factor beta1 (TGF-beta1). TGF-beta1 is an inhibitor of T-cell proliferation and cytotoxicity. Here we show that, in contrast to normal peripheral T cells, ATL cells are resistant to TGF-beta1-induced growth inhibition. The retroviral transduction of the Tax protein in peripheral T cells resulted in the loss of TGF-beta1 sensitivity. Transient transfection of Tax in HepG2 cells specifically inhibited Smad/TGF-beta1 signaling in a dose-dependent manner. In the presence of Tax transfection, increasing amounts of Smad3 restored TGF-beta1 signaling. Tax mutants unable to activate NF-kappaB or CREB pathways were also able to repress Smad3 transcriptional activity. Next we have demonstrated that Tax inhibits TGF-beta1 signaling by reducing the Smad3 DNA binding activity. However, Tax did not decrease the expression and the nuclear translocation of Smad3 nor did it interact physically with Smad3. Rather, Tax induced c-Jun N-terminal kinase (JNK) activity and c-Jun phosphorylation, leading to the formation of Smad3/c-Jun complexes. Whereas c-Jun alone abrogates Smad3 DNA binding, cotransfection of Tax and of a dominant-negative form of JNK or a c-Jun antisense-restored Smad3 DNA binding activity and TGF-beta1 responsiveness. In ATL and in normal T cells transduced by Tax, c-Jun was constitutively phosphorylated. Thus, we describe a new function of Tax, as a repressor of TGF-beta1 signaling through JNK/c-Jun constitutive activation, which may play a critical role in ATL leukemogenesis.