Transforming growth factor-β1 is essential to maintain T cell homeostasis, as illustrated by multiorgan inflammation in mice deficient in TGF-β1 signaling. Despite the physiological importance, the mechanisms that TGF-β1 uses to regulate T cell expansion remain poorly understood. TGF-β1 signals through transmembrane receptor serine/threonine kinases to activate multiple intracellular effector molecules, including the cytosolic signaling transducers of the Smad protein family. We used Smad3−/− mice to investigate a role for Smad3 in IL-2 production and proliferation in T cells. Targeted disruption of Smad3 abrogated TGF-β1-mediated inhibition of anti-CD3 plus anti-CD28-induced steady state IL-2 mRNA and IL-2 protein production. CFSE labeling demonstrated that TGF-β1 inhibited entry of wild-type anti-CD3 plus anti-CD28-stimulated cells into cycle cell, and this inhibition was greatly attenuated in Smad3−/− T cells. In contrast, disruption of Smad3 did not affect TGF-β1-mediated inhibition of IL-2-induced proliferation. These results demonstrate that TGF-β1 signals through Smad3-dependent and-independent pathways to inhibit T cell proliferation. The inability of TGF-β1 to inhibit TCR-induced proliferation of Smad3−/− T cells suggests that IL-2 is not the primary stimulus driving expansion of anti-CD3 plus anti-CD28-stimulated T cells. Thus, we establish that TGF-β1 signals through multiple pathways to suppress T cell proliferation.