Smad proteins are the most well-characterized intracellular effectors of the transforming growth factor beta (TGF-beta) signal. The ability of the Smads to act as transcriptional activators via TGF-beta-induced recruitment to Smad binding elements (SBE) within the promoters of TGF-beta target genes has been firmly established. However, the elucidation of the molecular mechanisms involved in TGF-beta-mediated transcriptional repression are only recently being uncovered. The proto-oncogene c-myc is repressed by TGF-beta, and this repression is required for the manifestation of the TGF-beta cytostatic program in specific cell types. We have shown that Smad3 is required for both TGF-beta-induced repression of c-myc and subsequent growth arrest in keratinocytes. The transcriptional repression of c-myc is dependent on direct Smad3 binding to a novel Smad binding site, termed a repressive Smad binding element (RSBE), within the TGF-beta inhibitory element (TIE) of the c-myc promoter. The c-myc TIE is a composite element, comprised of an overlapping RSBE and a consensus E2F site, that is capable of binding at least Smad3, Smad4, E2F-4, and p107. The RSBE is distinct from the previously defined SBE and may partially dictate, in conjunction with the promoter context of the overlapping E2F site, whether the Smad3-containing complex actively represses, as opposed to transactivates, the c-myc promoter.