Reorganization of the actin cytoskeleton in response to growth factor signaling, such as transforming growth factor beta (TGF-beta), controls cell adhesion, motility, and growth of diverse cell types. In Swiss3T3 fibroblasts, a widely used model for studies of actin reorganization, TGF-beta1 induced rapid actin polymerization into stress fibers and concomitantly activated RhoA and RhoB small GTPases. Consequently, dominant-negative RhoA and RhoB mutants blocked TGF-beta1-induced actin reorganization. Because Rho GTPases are known to regulate the activity of LIM-kinases (LIMK), we found that TGF-beta1 induced LIMK2 phosphorylation with similar kinetics to Rho activation. Cofilin and LIMK2 co-precipitated and cofilin became phosphorylated in response to TGF-beta1, whereas RNA interference against LIMK2 blocked formation of new stress fibers by TGF-beta1. Because the kinase ROCK1 links Rho GTPases to LIMK2, we found that inhibiting ROCK1 activity blocked completely TGF-beta1-induced LIMK2/cofilin phosphorylation and downstream stress fiber formation. We then tested whether the canonical TGF-beta receptor/Smad pathway mediates regulation of the above effectors and actin reorganization. Adenoviruses expressing constitutively activated TGF-beta type I receptor led to robust actin reorganization and Rho activation, whereas the constitutively activated TGF-beta type I receptor with mutated Smad docking sites (L45 loop) did not affect either actin organization or Rho activity. In line with this, ectopic expression of the inhibitory Smad7 inhibited TGF-beta1-induced Rho activation and cytoskeletal reorganization. Our data define a novel pathway emanating from the TGF-beta type I receptor and leading to regulation of actin assembly, via the kinase LIMK2.