Transforming growth factor beta (TGF-beta) can act as suppressor and promoter of cancer progression. Intracellular Smad proteins (i.e., receptor regulated Smads and common mediator Smad4) play a pivotal role in mediating antimitogenic and proapoptotic effects of TGF-beta, but their function in TGF-beta-induced invasion and metastasis is unclear. Here, we have investigated the role of Smad4 in a cellular and mouse model for TGF-beta-induced breast cancer progression. Consistent with its tumor suppressor function, specific silencing of Smad4 in NMuMG mammary gland epithelial cells using small hairpin RNA (shRNA)-expressing RNAi vectors strongly mitigated TGF-beta-induced growth inhibition and apoptosis. Smad4 knockdown also potently inhibited TGF-beta-induced epithelial to mesenchymal transition of NMuMG cells as measured by morphologic transformation from epithelial to fibroblast-like cells, formation of stress fibers, inhibition of E-cadherin expression, and gain of expression of various mesenchymal markers. Furthermore, we show that knockdown of Smad4 in MDA-MB-231 breast cancer cells strongly inhibited the frequency of bone metastasis in nude mice by 75% and significantly increased metastasis-free survival. Communication of MDA-MB-231 cells with the bone microenvironment, which is needed for optimal tumor cell growth and metastasis, may be affected in Smad4 knockdown cells as TGF-beta-induced expression of interleukin 11 was attenuated on Smad4 knockdown. Taken together, our results show that Smad4 plays an important role in both tumor suppression and progression of breast cancer cells.