Smad proteins play pivotal roles in mediating the transforming growth factor beta (TGF-beta) transcriptional responses. We show in this report that PIAS3, a member of the protein inhibitor of activated STAT (PIAS) family, activates TGF-beta/Smad transcriptional responses. PIAS3 interacts with Smad proteins, most strongly with Smad3. PIAS3 and Smad3 interact with each other at the endogenous protein level in mammalian cells and also in vitro, and the association occurs through the C-terminal domain of Smad3. We further show that PIAS3 can interact with the general coactivators p300/CBP, the first evidence that a PIAS protein can associate with p300/CBP. In contrast, PIASy, which inhibits Smad transcriptional activity and other transcriptional responses, is unable to interact with p300/CBP. The RING domain of PIAS3 is essential for interaction with p300/CBP, and a RING domain mutant PIAS3, which cannot bind p300/CBP, no longer activates TGF-beta/Smad-dependent transcription. Furthermore, we show that PIAS3, Smad3, and p300 can form a ternary complex, which is markedly increased by TGF-beta treatment. Taken together, our studies indicate that on TGF-beta treatment, PIAS3 can form a complex with Smads and p300/CBP and activate Smad transcriptional activity.