The t(3;21)(q26;q22) chromosomal translocation associated with blastic crisis of chronic myelogenous leukemia results in the formation of the AML1/Evi-1 chimeric protein, which is thought to play a causative role in leukemic transformation of hematopoietic cells. Here we show that AML1/Evi-1 represses growth-inhibitory signaling by transforming growth factor-beta (TGF-beta) in 32Dcl3 myeloid cells. The activity of AML1/Evi-1 to repress TGF-beta signaling depends on the two separate regions of the Evi-1 portion, one of which is the first zinc finger domain. AML1/Evi-1 interacts with Smad3, an intracellular mediator of TGF-beta signaling, through the first zinc finger domain, and represses the Smad3 activity, as Evi-1 does. We also show that suppression of endogenous Evi-1 in leukemic cells carrying inv(3) restores TGF-beta responsiveness. Taken together, AML1/Evi-1 acts as an inhibitor of TGF-beta signaling by interfering with Smad3 through the Evi-1 portion, and both AML1/Evi-1 and Evi-1 repress TGF-beta-mediated growth suppression in hematopoietic cells. Thus, AML1/Evi-1 may contribute to leukemogenesis by specifically blocking growth-inhibitory signaling of TGF-beta in the t(3;21) leukemia.