Transforming growth factor-beta (TGF-beta) plays a central role in fibrosis, contributing to the influx and activation of inflammatory cells, the epithelial to mesenchymal transdifferentiation (EMT) of cells and the influx of fibroblasts and their subsequent elaboration of extracellular matrix. TGF-beta signals through transmembrane receptor serine/threonine kinases to activate novel signalling intermediates called Smad proteins, which modulate the transcription of target genes. The use of mice with a targeted deletion of Smad3, one of the two homologous proteins which signals from TGF-beta/activin, shows that most of the pro-fibrotic activities of TGF-beta are mediated by Smad3. Smad3 null inflammatory cells and fibroblasts do not respond to the chemotactic effects of TGF-beta and do not autoinduce TGF-beta. The loss of Smad3 also interferes with TGF-beta-mediated induction of EMT and genes for collagens, plasminogen activator inhibitor-1 and the tissue inhibitor of metalloprotease-1. Smad3 null mice are resistant to radiation-induced cutaneous fibrosis, bleomycin-induced pulmonary fibrosis, carbon tetrachloride-induced hepatic fibrosis as well as glomerular fibrosis induced by induction of type 1 diabetes with streptozotocin. In fibrotic conditions that are induced by EMT, such as proliferative vitreoretinopathy, ocular capsule injury and glomerulosclerosis resulting from unilateral ureteral obstruction, Smad3 null mice also show an abrogated fibrotic response. Animal models of scleroderma, cystic fibrosis and cirrhosis implicate involvement of Smad3 in the observed fibrosis. Additionally, inhibition of Smad3 by overexpression of the inhibitory Smad7 protein or by treatment with the small molecule, halofuginone, dramatically reduces responses in animal models of kidney, lung, liver and radiation-induced fibrosis. Small moleucule inhibitors of Smad3 may have tremendous clinical potential in the treatment of pathological fibrotic diseases.