Transforming growth factor beta-induced phosphorylation of Smad3 is required for growth inhibition and transcriptional induction in epithelial cells.

Drosophila Mad proteins are intracellular signal transducers of decapentaplegic (dpp), the Drosophila transforming growth factor beta (TGF-beta)/bone morphogenic protein (BMP) homolog. Studies in which the mammalian Smad homologs were transiently overexpressed in cultured cells have implicated Smad2 in TGF-beta signaling, but the physiological relevance of the Smad3 protein in signaling by TGF-beta receptors has not been established. Here we stably expressed Smad proteins at controlled levels in epithelial cells using a novel approach that combines highly efficient retroviral gene transfer and quantitative cell sorting. We show that upon TGF-beta treatment Smad3 becomes rapidly phosphorylated at the SSVS motif at its very C terminus. Either attachment of an epitope tag to the C terminus or replacement of these three serine residues with alanine abolishes TGF-beta-induced Smad3 phosphorylation; these proteins act in a dominant-negative fashion to block the antiproliferative effect of TGF-beta in mink lung epithelial cells. A Smad3 protein in which the three C-terminal serines have been replaced by aspartic acids is also a dominant inhibitor of TGF-beta signaling, but can activate plasminogen activator inhibitor 1 (PAI-1) transcription in a ligand-independent fashion when its nuclear localization is forced by transient overexpression. Phosphorylation of the three C-terminal serine residues of Smad3 by an activated TGF-beta receptor complex is an essential step in signal transduction by TGF-beta for both inhibition of cell proliferation and activation of the PAI-1 promoter.