Transforming growth factor beta (TGF-beta) has a major role in cell proliferation, differentiation and apoptosis in many cell types. Integration of the TGF-beta pathway with other signalling cascades that control the same cellular processes may modulate TGF-beta responses. Here we report the discovery of a new functional link between TGF-beta and growth factor signalling pathways, mediated by a physical interaction between the serine-threonine kinase PKB (protein kinase B)/Akt and the transcriptional activator Smad3. Formation of the complex is induced by insulin, but inhibited by TGF-beta stimulation, placing PKB-Smad3 at a point of convergence between these two pathways. PKB inhibits Smad3 by preventing its phosphorylation, binding to Smad4 and nuclear translocation. In contrast, Smad3 does not inhibit PKB. Inhibition of Smad3 by PKB occurs through a kinase-activity-independent mechanism, resulting in a decrease in Smad3-mediated transcription and protection of cells against TGF-beta-induced apoptosis. Consistently, knockdown of the endogenous PKB gene with small-interfering RNA (siRNA) has the opposite effect. Our results suggest a very simple mechanism for the integration of signals arising from growth-factor- and TGF-beta-mediated pathways.