Transforming growth factor-beta 1 (TGF-beta 1) performs diverse cellular functions, including anti-inflammatory activity. The inhibitory Smad (I-Smad) Smad6 was previously shown to play an important role in TGF-beta 1-induced negative regulation of Interleukin-1/Toll-like receptor (IL-1R/TLR) signaling through binding to Pellino-1, an adaptor protein of interleukin-1 receptor associated kinase 1(IRAK1). However, it is unknown whether Smad7, the other inhibitory Smad, also has a role in regulating IL-1R/TLR signaling. Here, we demonstrate that endogeneous Smad7 and Smad6 simultaneously bind to discrete regions of Pellino-1 upon TGF-beta 1 treatment, via distinct regions of the Smad MH2 domains. In addition, the Smad7-Pellino-1 interaction abrogated NF-kappa B activity by blocking formation of the IRAK1-mediated IL-1R/TLR signaling complex, subsequently causing reduced expression of pro-inflammatory genes. Double knock-down of endogenous Smad6 and Smad7 genes by RNA interference further reduced the anti-inflammatory activity of TGF-beta 1 than when compared with single knock-down of Smad7. These results provide evidence that the I-Smads, Smad6 and Smad7, act as critical mediators for effective TGF-beta 1-mediated suppression of IL-1R/TLR signaling, by simultaneous binding to discrete regions of Pellino-1. (C) 2010 Elsevier Inc. All rights reserved.