TRANSFORMING growth factor-β TGF-β is the prototype for a family of extracellular proteins that affect cell proliferation and tissue differentiation^1–3. TGF-β-related factors, including BMP-2/4, Dpp and activin, act through two types of serine/threonine kinase receptors which can form a heteromeric complex^3,4. However, the mechanism of signal transduction by these receptors is largely unknown. In Drosophila, Mad is required for signalling by Dpp⁵. We have isolated complementary DNAs for four human Mad homologues, one of which, hMAD-4, is identical to DPC-4, a candidate tumour suppressor⁶. hMAD-3 and -4 synergized to induce strong ligand-independent TGF-β-like responses. When truncated at their carboxy termini, hMAD-3 and -4 act as dominant-negative inhibitors of the normal TGF-β response. The activity of hMAD-3 and -4 was regulated by the TGF-β receptors, and hMAD-3 but not hMAD-4 was phosphorylated and associated with the ligand-bound receptor complex. These results define hMAD-3 and -4 as effectors of the TGF-β response and demonstrate a function for DPC-4/hMAD-4 as a tumour suppressor.