Smads are intracellular signaling mediators for TGF-β superfamily. Smad1 and Smad5 are activated by BMP receptors. Here, we have cloned mouse Smad8 and functionally characterized its ability to transduce signals from BMP receptors. Constitutively active BMP type I receptors, ALK-3 and ALK-6, as well as ALK-2, were phosphorylated Smad8 and induced Smad8 interaction with Smad4. Nuclear translocation of Smad8 was stimulated by constitutively active BMP type I receptors. In contrast, constitutively active TGF-β type I receptor, ALK-5, did not exhibit any action on Smad8. Smad8 and Smad4 cooperatively induced the promoter of Xvent2, a homeobox gene that responds specifically to BMP signaling. Dominant-negative Smad8 was shown to inhibit the increase of alkaline phosphatase activity induced by BMP-2 on pluripotent mesenchymal C3H10T1/2 and myoblastic C2C12 cell lines. The presence of Smad8 mRNA in mouse calvaria cells and osteoblasts suggests a role of Smad8 in the osteoblast differentiation and maturation.