Transforming growth factor-beta (TGF-beta) functions as a tumor suppressor of the prostate through mechanisms that remain unresolved. Although TGF-beta receptors directly activate both Smads 2 and 3, to date, Smad3 has been shown to be the essential mediator of most Smad-dependent TGF-beta responses, including control of gene expression, cell growth, apoptosis, and tumor suppression. Using a robust lentiviral short hairpin RNA system to silence Smads 2 and/or 3 in the NRP-152 nontumorigenic rat prostate basal epithelial cell line, we provide the first evidence for Smad2 as a critical mediator of TGF-beta-induced apoptosis and gene expression. Parallel analyses revealed that Smad3 is the major mediator of TGF-beta-induced transcriptional and apoptotic responses in the NRP-154 rat prostate carcinoma cell line. Remarkably, silencing Smad2 alone caused malignant transformation of NRP-152 cells, as assayed by s.c. tumor growth in athymic mice, whereas silencing Smad3 alone did not induce tumors. Nevertheless, tumors induced by silencing both Smads 2 and 3 were larger than those from silencing Smad2 alone. Given previous reports that NRP-152 cells have a stem cell phenotype, we speculate a critical role for Smad2 as a tumor suppressor in the basal epithelial or stem cell compartment of the prostate.