Smad proteins are central mediators of the transcriptional effects of transforming growth factor beta (TGF-beta) superfamily that regulate a wide variety of biological processes. Smad7, an inhibitory Smad protein that prevents TGF-beta signaling by interacting with the activated type I TGF-beta receptor, was recently shown to induce sensitization of cells to different forms of cell death. Here we examined the effect of Smad7 on the c-Jun N-terminal kinase (JNK) cascade and investigated the role of this cascade in both the inhibitory and apoptotic functions of Smad7. The transient and stable expression of Smad7 caused a strong and sustained activation of JNK. Expression of a dominant-interfering mutant of mitogen-activated protein kinase kinase 4, which completely abolished Smad7-induced activation of JNK, had no effect on Smad7-mediated inhibition of TGF-beta signaling, indicating that the inhibitory function of Smad7 is independent of the JNK cascade. In contrast, expression of the dominant-interfering mutant of mitogen-activated protein kinase kinase 4 impaired the ability of Smad7 to promote cell death. These experiments reveal a novel link between Smad7 and the JNK cascade, which is essential for potentiation of cell death by this inhibitory Smad.