The abrogation of an intact TGFß/TGFß receptor signal transduction pathway in SMAD3−/− mice is associated with a decreased inflammatory response, and decreased acute and late response to ionizing irradiation damage. We tested the role of SMAD3 in bone marrow cellular capacity for hematopoiesis and in marrow stromal cellular potential for adipocytogenesis. Long-term bone marrow cultures (LTBMCs) were established from SMAD3−/−, +/−, and +/+ mice. Permanent clonal bone marrow stromal cell (MSC) lines were established from each mouse strain. The SMAD3+/+ and SMAD3+/− LTBMCs generated hematopoietic progenitor cells (by CFU-GEMM assay), and maintained active cobblestone island numbers and production of non-adherent cells for 22–23 weeks. In striking contrast, the SMAD3−/− LTBMCs demonstrated a significant increase in longevity of hematopoiesis as measured by each assay for over 34 weeks and non-adherent cells continued to form GEMM beyond 34 weeks. The number of CFU-GEMM per 5x104 cells (d 14) in SMAD3−/− cultures (188 ± 8.7) was 1250% greater (p<0.0001) than in SMAD3+/+ cultures (15.3 ± 2.3). Microscopic inspection at 27 weeks showed that more (16.5%, p<0.001) SMAD3−/− adherent cells contained lipid droplets (6.6% ± 0.7) compared with SMAD3+/+ adherent cells (0.4% ± 0.2). Because of that difference, we examined the regulation of adipocyte differentiation in MSC lines from those mice. First, there was more extensive (37-fold) adipocyte differentiation in SMAD3−/ − than SMAD3+/+ cultures. Second, there was a 7-fold attenuation of TGF-ß inhibition of adipocytogenesis in cells lacking SMAD3. RT-PCR evaluation showed greater expression of the adipocyte gene, ADIPSIN, and absence of its downregulation by TGFß in SMAD3−/− compared to SMAD3+/+. The data suggest that SMAD3 is a critical inhibitor of adipocyte differentiation. The data document pleiotrophic effects of interruption of the TGFß/TGFß receptor signal transduction cascade for both inhibition of hematopoietic support capacity and adipocyte differentiation of the bone marrow microenvironment.