Smad proteins are a family of highly conserved, intracellular proteins that signal cellular responses downstream of transforming growth factor-beta (TGF-beta) family serine/threonine kinase receptors. One of these molecules, Smad4, originally identified as the candidate tumor suppressor gene dpc-4, reconstitutes TGF-beta- and activin-dependent transcriptional responses in Smad4 null cell lines and interacts in a ligand-dependent manner with other Smad family members in both TGF-beta, activin, and bone morphogenetic protein-2/-4 pathways. Here, we used an assay based on the restoration of ligand-dependent transcriptional responses in a Smad4 null cell line to characterize functional domain structures within Smad4. We showed that restoration of TGF-beta-induced transcriptional responses by Smad4 was inhibited by co-transfection with a kinase dead TGF-beta type II receptor and that constitutive activation was blocked with TGF-beta neutralizing antibodies, confirming the essential role of Smad4 in TGF-beta signaling. Using a series of Smad4 mutation, deletion, and Smad1/Smad4 chimera constructs we identified a 47-amino acid deletion within the middle-linker region of Smad4 that is essential for the mediation of signaling responses. In addition, we showed that the NH2-terminal domain of Smad4 augments ligand-dependent activation associated with the middle-linker region, indicating that there is a distinct ligand-response domain within the N terminus of this molecule.