TGF-β can be a potent suppressor of lymphocyte effector cell functions and can mediate these effects via distinct molecular pathways. The role of TGF-β in regulating CD16-mediated NK cell IFN-γ production and antibody-dependent cellular cytotoxicity (ADCC) is unclear, as are the signaling pathways that may be utilized. Treatment of primary human NK cells with TGF-β inhibited IFN-γ production induced by CD16 activation with or without IL-12 or IL-2, and it did so without affecting the phosphorylation/activation of MAP kinases ERK and p38, as well as STAT4. TGF-β treatment induced SMAD3 phosphorylation, and ectopic overexpression of SMAD3 resulted in a significant decrease in IFN-γ gene expression following CD16 activation with or without IL-12 or IL-2. Likewise, NK cells obtained from smad3−/− mice produced more IFN-γ in response to CD16 activation plus IL-12 when compared with NK cells obtained from wild-type mice. Coactivation of human NK cells via CD16 and IL-12 induced expression of T-BET, the positive regulator of IFN-γ, and T-BET was suppressed by TGF-β and by SMAD3 overexpression. An extended treatment of primary NK cells with TGF-β was required to inhibit ADCC, and it did so by inhibiting granzyme A and granzyme B expression. This effect was accentuated in cells overexpressing SMAD3. Collectively, our results indicate that TGF-β inhibits CD16-mediated human NK cell IFN-γ production and ADCC, and these effects are mediated via SMAD3.