Transforming growth factor-beta (TGF beta) plays a critical role in the development of tissue fibrosis. Its expression is consistently elevated in affected organs and correlates with increased extracellular matrix deposition. During the last few years, tremendous progress has been made in understanding the molecular aspects of intracellular signaling downstream of the TGF beta receptors. In particular, Smad proteins--TGF beta receptor kinase substrates that translocate into the cell nucleus to act as transcription factors--have been studied extensively. Their role in the modulation of extracellular matrix gene expression is discussed in this review.