This study explores the relationship between anti-proliferative signaling by transforming growth factor-β (TGF-β) and insulin-like growth factor-binding protein-3 (IGFBP-3) in human breast cancer cells. In MCF-7 cells, the expression of recombinant IGFBP-3 inhibited proliferation and sensitized the cells to further inhibition by TGF-β1. To investigate the mechanism, we used T47D cells that lack type II TGF-β receptor (TGF-βRII) and are insensitive to TGF-β1. After introducing the TGF-βRII by transfection, the basal proliferation rate was significantly decreased. Exogenous TGF-β1 caused no further growth inhibition, but immunoneutralization of endogenous TGF-β1 restored the proliferation rate almost to the control level. The addition of IGFBP-3 did not inhibit the proliferation of control cells but caused dose-dependent inhibition in TGF-βRII-expressing cells when exogenous TGF-β1 was also present. Similarly, receptor-expressing cells showed dose-dependent sensitivity to exogenous TGF-β1 only in the presence of exogenous IGFBP-3. This indicates that in these cells, anti-proliferative signaling by exogenous IGFBP-3 requires both the TGF-βRII and exogenous TGF-β1. To investigate this synergism, the phosphorylation of TGF-β signaling intermediates, Smad2 and Smad3, was measured. Phosphorylation of each Smad was stimulated by TGF-β1 and, independently, by IGFBP-3 with the two agents together showing a cumulative effect. These data suggest that IGFBP-3 inhibitory signaling requires an active TGF-β signaling pathway and implicate Smad2 and Smad3 in IGFBP-3 signal transduction.