SMAD3 is one of the intracellular mediators that transduces signals from transforming growth factor-beta (TGF-beta) and activin receptors. We show that SMAD3 mutant mice generated by gene targeting die between 1 and 8 months due to a primary defect in immune function. Symptomatic mice exhibit thymic involution, enlarged lymph nodes, and formation of bacterial abscesses adjacent to mucosal surfaces. Mutant T cells exhibit an activated phenotype in vivo, and are not inhibited by TGF-beta1 in vitro. Mutant neutrophils are also impaired in their chemotactic response toward TGF-beta. Chronic intestinal inflammation is infrequently associated with colonic adenocarcinoma in mice older than 6 months of age. These data suggest that SMAD3 has an important role in TGF-beta-mediated regulation of T cell activation and mucosal immunity, and that the loss of these functions is responsible for chronic infection and the lethality of Smad3-null mice.