Previous studies showed that Compound Astragalus and Salvia miltiorrhiza Extract (CASE) has a protective effect against liver fibrosis. We hypothesized that CASE exerts the anti-fibrosis effect by mediating transforming growth factor-beta (TGF-beta)/Smad signaling pathway. To test this hypothesis, we induced fibrosis in rats by twice weekly injections of carbon tetrachloride (CCl(4)) and Smad2 phosphorylation was measured by immunohistochemical method; protein expression in myofibroblasts (MFBs) induced by TGF-beta1 was analyzed by western blotting and plasminogen activator inhibitor type 1 (PAI-1) transcriptional activity in MFBs was evaluated. The present study showed that, in vivo, CASE has protective effects against liver fibrosis in rats generated by CCl(4), and that CASE inhibits Smad2 phosphorylation at C-terminal region and expression of alpha-smooth muscle actin (alpha-SMA). Our experiment further demonstrated that, in vitro, (1) CASE inhibits TGF-beta(1)-dependent Smad2 phosphorylation at C-terminal region and Smad2 and Smad3 phosphorylation at linker region in MFBs in a dose-dependent manner; (2) CASE decreases the level of Smad 2/3/4 complex in MFBs induced by TGF-beta(1) in a dose-dependent manner; (3) CASE inhibits PAI-1 transcriptional activity in MFBs induced by TGF-beta(1) in a dose-dependent manner; and (4) CASE markedly decreases c-Jun N-terminal kinase (JNK) phosphorylation in MFBs induced by TGF-beta(1). Our results suggest that CASE's anti-fibrosis effect in chronically injured liver was exerted by inhibiting TGF-beta/Smads signal transduction.