Multiple endocrine neoplasia type 1 (MEN1) is characterized by tumors of the parathyroid, enteropancreas, and anterior pituitary. The MEN1 gene encodes the tumor suppressor menin of 610 amino acids that has multiple protein partners and activities. The particular pathways that, when lost, lead to tumorigenesis are not known. We demonstrated that members of a three-generation MEN1 kindred are heterozygous for a donor splice site mutation at the beginning of intron 3 (IVS3 + 1G→A). Lymphoblastoid cells of a mutant gene carrier had, in addition to the wild-type menin transcript, an aberrant transcript resulting from use of a cryptic splice site within exon III that splices to the start of exon IV. The predicted menin Δ(184-218) mutant has an in-frame deletion of 35 amino acids but is otherwise of wild-type sequence. The transfected menin Δ(184-218) mutant was well expressed and fully able to mediate the normal inhibition of the activity of the transcriptional regulators JunD and NF-κB. However, it was defective in mediating TGF-β-stimulated Smad3 action in promoter-reporter assays in insulinoma cells. Importantly, lymphoblastoid cells from an individual heterozygous for the mutation had reduced TGF-β-induced (Smad3) transcriptional activity but normal JunD and NF-κB function. In addition, the mutant gene carrier lymphoblastoid cells proliferated faster and were less responsive to the cytostatic effects of TGF-β than cells from an unaffected family member. In conclusion, the menin mutant exhibits selective loss of the TGF-β signaling pathway and loss of cell proliferation control contributing to the development of MEN1.