ABSTRACT: Smad4 is an essential signal transducer of the transforming growth factor beta (TGF-beta) signalling pathway and has been identified as a tumour suppressor, being mutated in approx. 50% of pancreatic cancers and approx. 15% of colorectal cancers. Two missense mutations in the C-terminal domain of Smad4, D351H (Asp351-->His) and D537Y (Asp537-->Tyr), have been described recently in the human colorectal cancer cell lines CACO-2 and SW948 respectively [Woodford-Richens, Rowan, Gorman, Halford, Bicknell, Wasan, Roylance, Bodmer and Tomlinson (2001) Proc. Natl. Acad. Sci. U.S.A. 98, 9719-9723]. Previous work in vitro suggested that only Asp-351 was required for interaction with Smad2 [Wu, Fairman, Penry and Shi (2001) J. Biol. Chem. 276, 20688-20694]. In the present study, we investigate the functional consequences of these point mutations in vivo. We demonstrate that neither of these colorectal cancer cells undergo growth arrest in response to TGF-beta, which can be explained, at least in part, by their inability to up-regulate cyclin-dependent kinase inhibitors p21 (CIP1 ) or p15 ( INK4b) after TGF-beta stimulation. Although the point-mutated Smad4s are expressed at normal levels in these colorectal cancer cells, they cannot interact with either TGF-beta-induced phosphorylated Smad2 or Smad3. As a result, these Smad4 mutants do not accumulate in the nucleus after TGF-beta stimulation, are not recruited to DNA by relevant Smad-binding transcription factors and cannot generate transcriptionally active DNA-bound complexes. Therefore both these colorectal tumour cells completely lack functional Smad4 activity owing to the missense mutations. Given the location of these mutations in the three-dimensional structure of the Smad4 C-terminal domain, the results also give us significant insights into Smad complex formation.