The Smad2 protein plays an essential role in the transforming growth factor-beta (TGF-beta) signaling pathway. This pathway mediates growth inhibitory signals from the cell surface to the nucleus. Although Smad2 protein is significantly mutated in human cancers, there is no definitive evidence implicating Smad2 as a tumor-suppressor gene. Here we show that overexpression of the tumor-derived missense mutation Smad2.D450E, an unphosphorylable form of Smad2 found in colorectal and lung cancers, did not abolish the TGF-beta-mediated growth arrest, suggesting that resistance to the growth-inhibiting effects of TGF-beta exhibited by human tumors cannot be linked to the inactivation of Smad2 protein. In contrast, overexpression of Smad2.D450E induces cellular invasion, and this effect was enhanced by TGF-beta. A similar invasive phenotype was obtained in cells expressing another inactivating mutation in Smad2 (Smad2.P445H) found in colorectal cancer. These findings indicate that genetic defects in Smad2 are sufficient to confer the invasion-promoting effect of TGF-beta and reveal that TGF-beta acts through Smad2 to induce cellular invasion by a novel mechanism that is independent of Smad2 phosphorylation by the activated TGF-beta type I receptor.