Objective: To better understand the role of TGF- and its primary signaling protein Smad3 in the development of intimal hyperplasia. Methods and Results: Male Sprague-Dawley rats underwent left carotid balloon injury followed by intra-arterial infection with adenovirus expressing Smad3 (AdSmad3). In uninfected injured arteries, endogenous Smad3 was upregulated with expression peaking at 14 days. Moreover, in arteries infected with AdSmad3, we observed enhancement of intimal hyperplasia and increased vascular smooth muscle cell (VSMC) proliferation. The novel finding, that TGF-/Smad3 stimulated rather than inhibited VSMC proliferation, was confirmed in cultured VSMCs infected with AdSmad3 and treated with TGF-. To identify the mechanism underlying TGF-/Smad3 mediated VSMC proliferation, we studied the cyclin-dependent kinase inhibitor (CKI) p27. Although upregulation of Smad3 in VSMCs had no significant effect on total p27 levels, Smad3 did stimulate enhanced phosphorylation of p27 at serine10 (S10) as well as nuclear export of p27, events associated with cell proliferation. Furthermore, S10 phosphorylated p27 was also increased in AdSmad3 infected injured rat carotid arteries, demonstrating the existence of this same mechanism in vivo. Conclusions: Our findings identify a novel mechanism for TGF-'s effect on intimal hyperplasia. In the presence of elevated levels of Smad3 that develop in response to injury, TGF- stimulates SMC proliferation through a mechanism involving phosphorylation and nuclear export of p27.