Alterations have been demonstrated in ligand and cognate receptor system of the transforming growth factor beta (TGF-beta) pathway in prostate cancer (PC). Still, little is known about changes in the activity of the intracellular Smad cascade of TGF-beta signaling during prostate carcinogenesis. We used immunohistochemistry to analyze phosphorylated Smad2 (p-Smad2), nuclear Smad4 and inhibitory-Smad7 in epithelial cells of normal, hyperplastic and malignant prostate. Specimens comprised 49 tissue cores of PC, 10 benign prostate hypertrophies and three normal prostates. Nuclear p-Smad2 (P<0.001) and nuclear Smad4 (P=0.023) were significantly decreased in PC with remarkable variations in cytoplasmic Smad7 levels. Substantial decreases in p-Smad2 and Smad4 levels were found in specimens with primary Gleason grades 3 and 4, whereas in grade 5, levels were markedly higher. Our results provide the first evidence for changes and reversible attenuation in the Smad system of the TGF-beta pathway during prostate carcinogenesis.