The role of transforming growth factor (TGF)-β and its signal in atherogenesis is not fully understood. Here, we examined mice lacking Smad3, a major downstream mediator of TGF-β, to clarify the precise role of Smad3-dependent signaling in vascular response to injury. Femoral arteries were injured in wild-type and Smad3-null (null) male mice on C57Bl/6 background. Histopathological evaluation of the arteries 1 to 3 weeks after the injury revealed significant enhancement of neointimal hyperplasia in null compared with wild-type mice. Transplantation of null bone marrow to wild-type mice did not enhance neointimal thickening, suggesting that vascular cells in situ play a major role in the response. Null intima contained more proliferating smooth muscle cells (SMC) with less amount of collagen compared with wild-type intima. TGF-β caused significant inhibition of cellular proliferation in wild-type aortic SMC, whereas the growth of null SMC was only weakly inhibited by TGF-β in vitro, indicating a crucial role of Smad3 in the growth inhibitory function. On the other hand, Smad3-deficiency did not attenuate chemotaxis of SMC toward TGF-β. TGF-β increased transcript level of α2 type I collagen and tissue inhibitor of metalloproteinases-1, and suppressed expression and activity of matrix metalloproteinases in wild-type SMC. However, these effects of TGF-β were diminished in null SMC. Our findings altogether show that the loss of Smad3 pathway causes enhanced neointimal hyperplasia on injury through modulation of growth and matrix regulation in vascular SMC. These results indicate a vasculoprotective role of endogenous Smad3 in response to injury.