RATIONALE: Cardiac fibroblasts are key effector cells in the pathogenesis of cardiac fibrosis. Transforming growth factor (TGF)-beta/Smad3 signaling is activated in the border zone of healing infarcts and induces fibrotic remodeling of the infarcted ventricle contributing to the development of diastolic dysfunction. OBJECTIVE: The present study explores the mechanisms responsible for the fibrogenic effects of Smad3 by dissecting its role in modulating cardiac fibroblast phenotype and function. METHODS AND RESULTS: Smad3 null mice and corresponding wild-type controls underwent reperfused myocardial infarction protocols. Surprisingly, reduced collagen deposition in Smad3-/- infarcts was associated with increased infiltration with myofibroblasts. In vitro studies demonstrated that TGF-beta1 inhibited murine cardiac fibroblast proliferation; these antiproliferative effects were mediated via Smad3. Smad3-/- fibroblasts were functionally defective, exhibiting impaired collagen lattice contraction when compared with wild-type cells. Decreased contractile function was associated with attenuated TGF-beta-induced expression of alpha-smooth muscle actin. In addition, Smad3-/- fibroblasts had decreased migratory activity on stimulation with serum, and exhibited attenuated TGF-beta1-induced upregulation of extracellular matrix protein synthesis. Upregulation of connective tissue growth factor, an essential downstream mediator in TGF-beta-induced fibrosis, was in part dependent on Smad3. Connective tissue growth factor stimulation enhanced extracellular matrix protein expression by cardiac fibroblasts in a Smad3-independent manner. CONCLUSIONS: Disruption of Smad3 results in infiltration of the infarct with abundant hypofunctional fibroblasts that exhibit impaired myofibroblast transdifferentiation, reduced migratory potential, and suppressed expression of fibrosis-associated genes.