Activation of transforming growth factor  receptors causes the phosphorylation and nuclear translocation of Smad proteins, which then participate in the regulation of expression of target genes. We describe a novel Smad-interacting protein, SIP1, which was identified using the yeast two-hybrid system. Although SIP1 interacts with the MH2 domain of receptor-regulated Smads in yeast and in vitro, its interaction with full-length Smads in mammalian cells requires receptor-mediated Smad activation. SIP1 is a new member of the ␦EF1/ Zfh-1 family of two-handed zinc finger/homeodomain proteins. Like ␦EF1, SIP1 binds to 5-CACCT sequences in different promoters, including the Xenopus brachyury promoter. Overexpression of either full-length SIP1 or its C-terminal zinc finger cluster, which bind to the Xbra2 promoter in vitro, prevented expression of the endogenous Xbra gene in early Xenopus embryos. Therefore, SIP1, like ␦EF1, is likely to be a transcriptional repressor, which may be involved in the regulation of at least one immediate response gene for activin-dependent signal transduction pathways. The identification of this Smad-interacting protein opens new routes to investigate the mechanisms by which transforming growth factor  members exert their effects on expression of target genes in responsive cells and in the vertebrate embryo.Ligands of the TGF- 1 family exert their biological effects by activating serine/threonine kinase receptor complexes, which in turn activate intracellular mediators, the Smad proteins. Smads were initially identified by means of genetic studies in Drosophila and Caenorhabditis elegans as Mad and Sma gene products, respectively. Nine different vertebrate Smads have been isolated (reviewed in Refs. 1-3; Ref. 4). These proteins are characterized by a three-domain structure containing conserved N-terminal and C-terminal domains, called the MH1 and MH2 domains, which flank a more variable, proline-rich linker region. The Smads can be classified into three subgroups based on their distinct functions. The receptor-regulated Smads (Smad1, 2, 3, 5, and 8) contain a conserved SSXS motif at their extreme C-terminal end. Upon ligand stimulation, two serines in this motif are directly phosphorylated by specific type I receptors. Once activated, these Smads associate with Smad4, a common mediator Smad, and the heteromeric complexes translocate to the nucleus where they mediate responses to specific ligands. Smads 1, 5, and 8 act in bone morphogenetic protein (BMP) pathways, whereas Smads 2 and 3 act in activin and TGF- pathways. A third group of Smads, the inhibitory Smads (Smad6 and Smad7), prevent the activation of receptorregulated Smads or their heteromerization with Smad4. Functional homologues of inhibitory Smads and the common mediator Smad in Drosophila have been identified as Dad and Medea, respectively (1-3).In the absence of signaling, Smads are kept in a latent conformation through an intramolecular interaction between the MH1 and MH2 domains. Activation of receptor-regulated Smads has...
