Smad and MAPK signaling cascades are involved in erythroid and megakaryocytic differentiation. The inhibitory Smad for TGF-beta/activin signaling, Smad7, may directly or indirectly affect these signaling pathways. By modulating Smad7 expression, we attempted to delineate the relevance of Smad7 during erythro-megakaryocytic (E/M) differentiation of human erythroleukemia cells. Smad7 transcripts were detected at low levels in different erythroleukemia cell lines (TF-1, HEL and K562). Reduction of expression of endogenous Smad7 by RNA interference enhanced erythroid differentiation of K562 cells in response to physiological doses of activin-A/TGF-beta1. Stable over-expression of Smad7 in K562 cells (K562/7) prevented activation of Smad2/3 and MAPK (ERK1/2, p38 and JNK1/2) proteins by activin-A/TGF-beta1 and subsequent induction of erythroid differentiation. High levels of Smad7 also interfered with hydroxyurea- and butyrate-, but not hemin-induced erythroid differentiation. Interestingly, K562/7 cells were found to harbor a significant proportion (about 35%) of large ploy nucleated cells compared to fewer than 12% in control cells. K562/7 cells treated with phorbol 12-myristate 13-acetate (PMA), showed a great shift in ploidy towards high ploidy classes (> or =8N) accompanied with an increase in the expression of the maturation marker CD42b. We showed here that: (a) low levels of endogenous Smad7 in erythroleukemia cells are physiologically relevant, and (b) high levels of Smad7 interferes with TGF-beta/activin-induced Smad/MAPK signaling and erythro-differentiation and promotes megakaryocytic differentiation, possibly by blocking autocrine TGF-beta.