Smad3 is an important mediator of the TGF beta signaling pathway. Interestingly, Smad3-deficient (Smad3-/-) mice have reduced fertility compared with wild-type (WT) mice. To better understand the molecular mechanisms underlying the reduced fertility in Smad3-/- animals, this work tested the hypothesis that Smad3 deficiency interferes with three critical aspects of folliculogenesis: growth, atresia, and differentiation. Growth was assessed by comparing the size of follicles, expression of proliferating cell nuclear antigen, and expression of cell cycle genes in Smad3-/- and WT mice. Atresia was assessed by comparing the incidence of atresia and expression of bcl-2 genes involved in cell death and cell survival in Smad3-/- and WT mice. Differentiation was assessed by comparing the expression of FSH receptor (FSHR), estrogen receptor (ER) alpha, ER beta, and inhibin alpha-, beta(A)-, and beta(B)-subunits in Smad3-/- and WT mice. Because growth, atresia, and differentiation are regulated by hormones, estradiol, FSH, and LH levels were compared in Smad3-/- and WT mice. Moreover, because alterations in folliculogenesis can affect the ability of mice to ovulate, the number of corpora lutea and ovulated eggs in response to gonadotropin treatments were compared in Smad3-/- and WT animals. The results indicate that Smad3 deficiency slows follicle growth, which is characterized by small follicle diameters, low levels of proliferating cell nuclear antigen, and low expression of cell cycle genes (cyclin-dependent kinase 4 and cyclin D2). Smad3 deficiency also causes atretic follicles, degenerated oocytes, and low expression of bcl-2. Furthermore, Smad3 deficiency affects follicular differentiation as evidenced by decreased expression of ER beta, increased expression of ER alpha, and decreased expression of inhibin alpha-subunits. Smad3 deficiency causes low estradiol and high FSH levels. Finally, Smad3-/- ovaries have no corpora lutea, and they do not ovulate after ovulatory induction with exogenous gonadotropins. Collectively, these data provide the first evidence that reduced fertility in Smad3-/- mice is due to impaired folliculogenesis, associated with altered expression of genes that control cell cycle progression, cell survival, and cell differentiation. The findings that Smad3-/- follicles have impaired growth, increased atresia, and altered differentiation in the presence of high FSH levels, normal expression of FSHR, and lower expression of cyclin D2, suggest a possible interaction between Smad3 and FSH signaling downstream of FSHR in the mouse ovary.