The transforming growth factor-beta (TGF-beta) superfamily regulates a multitude of cellular and developmental events. TGF-beta family ligands signal through transmembrane serine/threonine kinase receptors whose downstream effectors are largely unknown. Using genetic data from the fruit fly, we have identified a downstream effector of TGF-beta-induced signaling. TGF-beta signaling protein-1 (BSP-1) is rapidly phosphorylated in response to TGF-beta. Localization of bsp-1 to chromosome 4q28 suggests a role in carcinogenesis. These data suggest that BSP-1 is the prototype of a new class of signaling molecules.