The Smad4/DPC4 protein functions as a key transcription factor in transforming growth factor beta (TGF-beta) signaling pathways. However, the downstream target genes regulated by Smad4/DPC4 have not been identified until now. We previously demonstrated that the loss of TGF-beta-induced p21waf1 expression and growth inhibition correlates with inactivation of the Smad4/DPC4 gene. Now we show that transient overexpression of Smad4/DPC4 can induce p21waf1 expression, specific Smad4 DNA binding activity, SBE4-luc reporter gene activity, and subsequent growth inhibition in Smad4/DPC4-null cells and other carcinoma cells in the presence or absence of TGF-beta. Taken together, these data show that p21waf1 is one of the Smad4/DPC4-regulated downstream target genes and suggest that overexpression of the Smad4/DPC4 gene can bypass TGF-beta receptor activation and reestablish one of the key regulatory controls of cell proliferation.