The generation of animals lacking SMAD proteins, which transduce signals from transforming growth factor-beta (TGF-beta), has made it possible to explore the contribution of the SMAD proteins to TGF-beta activity in vivo. Here we report that, in contrast to predictions made on the basis of the ability of exogenous TGF-beta to improve wound healing, Smad3-null (Smad3ex8/ex8) mice paradoxically show accelerated cutaneous wound healing compared with wild-type mice, characterized by an increased rate of re-epithelialization and significantly reduced local infiltration of monocytes. Smad3ex8/ex8 keratinocytes show altered patterns of growth and migration, and Smad3ex8/ex8 monocytes exhibit a selectively blunted chemotactic response to TGF-beta. These data are, to our knowledge, the first to implicate Smad3 in specific pathways of tissue repair and in the modulation of keratinocyte and monocyte function in vivo.