Hydrogen peroxide-inducible clone-5 (Hic-5, or androgen receptor-associated protein 55) is a transforming growth factor-β-inducible LIM protein whose deregulation is implicated in the progression of prostate cancer. Here, we report that Hic-5 binds to Smads 1, 5 and 8, and represses bone morphogenetic protein (BMP) signaling responses. Myc-Hic-5 but not Myc-paxillin was specifically immunoprecipitated with anti-FLAG IgG1 from lysates of HEK293 co-transfected with either Myc-Hic-5 or Myc-paxillin and FLAG-tagged Smads 1, 5 or 8. We showed that such interactions require the LIM3 domain of Hic-5 and the MH2 domain of those Smads. Anti-Hic-5 antibody specifically pulled down endogenous Smad1 in both the PC3 human prostate cell line and primary cultures of rat prostate fibroblasts, supporting that Hic-5 binds to Smad1 at the endogenous level. Bacterially expressed glutathione S-transferase (GST)-Smads 1, 5 or 8, but not GST alone, pulled down in vitro transcribed and translated Hic-5, implicating that Hic-5 binds directly to Smads 1, 5 and 8. Significantly, using Hic-5 small hairpin RNA silencing and overexpression systems, we show that Hic-5 (at both the endogenous and exogenous levels) represses the ability of BMP4 to induce expression of the inhibitor of differentiation-1 (Id1; a downstream target gene of BMP), activate the Id1 gene promoter and induce apoptosis in human and rat prostate epithelial cells. Moreover, silencing of Hic-5 in PC3 cells as well as in the WPMY-1 human prostate stroma cell line greatly enhances the levels of endogenous phospho-Smad1/5/8. Finally, we provide fluorescent microscopic imaging to support that Smad1 and Hic-5 mutually interact also at the level of their nuclear export mechanisms. Collectively, these results provide the first evidence for a physical and mutual functional interaction between Hic-5 and the BMP signaling pathway.