Smad proteins transduce signals for transforming growth factor-beta (TGF-beta)-related factors. Smad proteins activated by receptors for TGF-beta form complexes with Smad4. These complexes are translocated into the nucleus and regulate ligand-induced gene transcription. 12-O-tetradecanoyl-13-acetate (TPA)-responsive gene promoter elements (TREs) are involved in the transcriptional responses of several genes to TGF-beta (refs 5-8). AP-1 transcription factors, composed of c-Jun and c-Fos, bind to and direct transcription from TREs, which are therefore known as AP1-binding sites. Here we show that Smad3 interacts directly with the TRE and that Smad3 and Smad4 can activate TGF-beta-inducible transcription from the TRE in the absence of c-Jun and c-Fos. Smad3 and Smad4 also act together with c-Jun and c-Fos to activate transcription in response to TGF-beta, through a TGF-beta-inducible association of c-Jun with Smad3 and an interaction of Smad3 and c-Fos. These interactions complement interactions between c-Jun and c-Fos, and between Smad3 and Smad4. This mechanism of transcriptional activation by TGF-beta, through functional and physical interactions between Smad3-Smad4 and c-Jun-c-Fos, shows that Smad signalling and MAPK/JNK signalling converge at AP1-binding promoter sites.