The TGF-b superfamily is composed of over 40 structurally related growth factors including the activins and bone morphogenetic proteins. Their actions encompass cellular and molecular mechanisms ranging from inhibition of epithelial and lymphoid cell growth , to stimulation of extracellular matrix production by mesenchymal cells, to hair follicle development. All of the members of the TGF-b superfamily signal through pairs of type I and type II transmembrane receptor serine-threonine kinases and share downstream signaling mediators called Smad proteins. Smads are intracellular proteins that shuttle from the cytoplasm to the nucleus. There are three classes of Smad proteins; receptor-specific Smads (R-Smad- 1, 2, 3, 5, and 8), inhibitory Smads (I-Smad- 6 and 7), and the common partner Smad (Smad-4). The TGF-b superfamily signaling pathways play important roles in hair follicle development. However, in vivo studies suggest that during hair follicle development, individual Smads may compensate for each other's loss.. Smad4, the central intracellular mediator of TGF-b family signaling, affects hair follicle differentiation primarily by mediating BMP signaling. Smad7 significantly affects hair follicle development and differentiation by blocking the TGF-b/Activin/BMP pathway, and by inhibiting WNT/b-catenin signaling via ubiquitin-mediated b-catenin degradation. In addition, TGF-b is a key regulator of inflammation, and deficiency of this molecule leads to extensive inflammation. Recently, we have demonstrated that Smad7 mediates the TGF-b anti-inflammatory signal to block pro-inflammatory TNF-a signaling. Overexpression of Smad7 in mouse skin results in abnormalities of epidermal and hair follicle development and/or differentiation. However, overexpression of Smad7 mutant, which does not suppress TNF-a signaling, but still inhibits TGF-b signaling, has little effect on hair follicle development.