Transforming growth factor (TGF)-β is a multifunctional cytokine with anti-inflammatory, reparative and neuroprotective functions. Increased levels of TGFβ in Alzheimer disease (AD) are associated with perivascular deposition of extracellular matrix, which may impair clearance of β-amyloid and contribute to the development of cerebral amyloid angiopathy. TGFβ signaling is transduced by Smad proteins: on TGFβ receptor activation, Smads 2 and 3 are released from sequestration by microtubules, phosphorylated (forming pSmad2/3), and, together with Smad 4, translocated to the nucleus, where they initiate the transcription of multiple genes. Neuronal microtubule assembly is disturbed in AD when tau, a microtubule-stabilizing protein, is hyperphosphorylated and forms neurofibrillary tangles. We have investigated the relationship between Ser202 phospho-tau and pSmads 2 and 3 in the temporal lobe in AD. Within neurons in control brains, pSmads 2 and 3 were almost exclusively intranuclear. In AD, pSmad 3 bound to phospho-tau (mostly insoluble tau) and accumulated in the cytoplasm of tangle-bearing neurons; this was accompanied by a marked decrease in nuclear pSmad3. pSmads 2 and 3 were also present in neuronal granulovacuolar inclusions. Our findings suggest that neurofibrillary tangles sequester pSmad3, preventing its translocation into the nucleus and the induction of gene transcription. Interference with the Smad signaling may adversely affect survival of tangle-bearing neurons in AD.