To investigate the subcellular distributions of Smad proteins, the intracellular mediators of transforming growth factor-beta family cytokines, we examined their sequences for nuclear export signals (NES). We found a leucine-rich NES-like motif (termed NES2) in the central linker region of the receptor-regulated Smads that is absent from the other two classes of Smads (Co-Smads and I-Smads). In microinjection assays, NES2 peptide caused nuclear export of a fused glutathione S-transferase protein. Mutations in NES2 converted Smad1 from an even distribution throughout the cells into an exclusive nuclear localization in both transiently and stably expressing cell lines, and this nuclear enrichment was more pronounced than that induced by mutations in NES1. Furthermore, overexpression of CRM1, the cellular export receptor, transforms Smad1 into a mostly cytoplasmic profile by enhancing its nuclear export. The Smad1 NES2 mutant but not the Smad1 NES1 mutant is mostly resistant to this cytoplasmic targeting, indicating that NES2, not NES1, is the major target for CRM1 in Smad1. We further confirmed the functionality of NES2 by a heterokaryon assay. The Smad1 NES1 mutant displays good ligand responsiveness and moderately lowered transcriptional activity compared with wild type Smad1. In contrast, the Smad1 NES2 mutant shows a severe disruption in reporter gene activation, minimal response to bone morphogenetic protein stimulation, and significantly lowered bone morphogenetic protein-induced phosphorylation, which may be the reason for its deficient transcription activity. Thus, we have defined a major NES in Smad1 that is essential for its ligand-induced coupling with cell surface receptors and hence, transcriptional activity. Our study, along with recent studies of the nucleocytoplasmic shuttling of Smad2 and Smad3 proteins, demonstrate that continued nucleocytoplasmic shuttling is a common requisite for the active signaling of R-Smads. Although conserved in other R-Smads such as Smad3, NES2 is not functional in these R-Smads because CRM1 overexpression fails to target them to cytoplasm. Possible reasons for this discrepancy are discussed.