c-Ski inhibits transforming growth factor-β (TGF-β) signaling through interaction with Smad proteins. c-Ski represses Smad-mediated transcriptional activation, probably through its action as a transcriptional co-repressor. c-Ski also inhibits TGF-β-induced downregulation of genes such as c-myc. However, mechanisms for transcriptional regulation of target genes by c-Ski have not been fully determined. In this study, we examined how c-Ski inhibits both TGF-β-induced transcriptional activation and repression. DNA-affinity precipitation analysis revealed that c-Ski enhances the binding of Smad2 and 4, and to a lesser extent Smad3, to both CAGA and TGF-β1 inhibitory element probes. A c-Ski mutant, which is unable to interact with Smad4, failed to enhance the binding of Smad complex on these probes and to inhibit the Smad-responsive promoter. These results suggest that stabilization of inactive Smad complexes on DNA is a critical event in c-Ski-mediated inhibition of TGF-β signaling.