Multiple co-repressors such as N-CoR/SMRT, mSin3, and the c-ski proto-oncogene product (c-Ski) mediate the transcriptional repression induced by Mad and the thyroid hormone receptor by recruiting the histone deacetylase complex. c-Ski also binds directly to Smad proteins, which are transcriptional activators in the transforming growth factor-beta (TGF-beta)/bone morphogenetic protein (BMP) signaling pathways, and inhibits TGF-beta/BMP-induced transcriptional activation. However, it remains unknown whether other co-repressor(s) are also involved with Ski in the negative regulation of the TGF-beta/BMP signaling pathways. Here, we report that the co-repressor homeodomain-interacting protein kinase 2 (HIPK2) directly binds to both c-Ski and Smad1. HIPK2 efficiently inhibited Smad1/4-induced transcription from the Smad site-containing promoter. A dominant negative form of HIPK2, in which the ATP binding motif in the kinase domain and the putative phosphorylation sites were mutated, enhanced Smad1/4-dependent transcription and the BMP-induced expression of alkaline phosphatase. Furthermore, the c-Ski-induced inhibition of the Smad1/4-dependent transcription was suppressed by a dominant negative form of HIPK2. The HIPK2 co-repressor activity may be regulated by an uncharacterized HIPK2 kinase. These results indicate that HIPK2, together with c-Ski, plays an important role in the negative regulation of BMP-induced transcriptional activation.