The expression of Smad2 and Smad3 and the influence of exogenous transforming growth factorbeta1 (TGFbeta1) on them in rat bone marrow-derived mesenchymal stem cells (MSCs) cultured in vitro were investigated. The effects of different concentrations of TGFbeta1 on cell proliferation and ALP activity were detected by MTT and PNPP in MSCs respectively. The expression of Smad2 and Smad3 and the influence of exogenous TGFbeta1, on them were also examined by immunocytochemistry and Western blot assays. The exogenous TGFbeta1 induced a dose-dependent decrease in cell proliferation and a dose-dependent increase in ALP activity, which plateaued at 5 ng/ml. Smad2 and Smad3 proteins were detected only in the cytoplasm in the absence of TGFbeta1, and TGFbeta1, could stimulate the translocation of them from the cytoplasm to the nucleus. The total amount of Smad2 protein remained unchanged before and after TGFbeta1 treatment (P > 0.05). The expression levels of Smad3 remained unchanged after 3 h and 6 h treatment (P > 0.05), but decreased markedly after 24 h treatment (P <0.05). It was concluded that TGFbeta1 is a latent osteoinductive factor involved in osteoblastic differentiation. Both Samd2 and Smad3 mediate TGFbeta1 signaling as downstream mediators in MSCs. The biological output of TGFbeta1 triggering the osteoblastic differentiation could be entirely determined by Smad3 in MSCs.