Mounting evidence indicates that Smad proteins are required for TGFβ signaling, but the way(s) in which Smad proteins propagate this signal is unclear. We found that two human Smad proteins (Smad3 and Smad4) could specifically recognize an identical 8 bp palindromic sequence (GTCTAGAC). Tandem repeats of this palindrome conferred striking TGFβ responsiveness to a minimal promoter. This responsiveness was abrogated by targeted deletion of the cellular Smad4 gene. These results define a novel biochemical property of Smad proteins that is likely to play a direct role in the biologic responses to TGFβ and related ligands.