The p53 tumor suppressor belongs to a family of proteins that sense multiple cellular inputs to regulate cell proliferation, apoptosis, and differentiation. Whether and how these functions of p53 intersect with the activity of extracellular growth factors is not understood. Here, we report that key cellular responses to TGF-beta signals rely on p53 family members. During Xenopus embryonic development, p53 promotes the activation of multiple TGF-beta target genes. Moreover, mesoderm differentiation is inhibited in p53-depleted embryos. In mammalian cells, the full transcriptional activation of the CDK inhibitor p21(WAF1) by TGF-beta requires p53. p53-deficient cells display an impaired cytostatic response to TGF-beta signals. Smad and p53 protein complexes converge on separate cis binding elements on a target promoter and synergistically activate TGF-beta induced transcription. p53 can physically interact in vivo with Smad2 in a TGF-beta-dependent fashion. The results unveil a previously unrecognized link between two primary tumor suppressor pathways in vertebrates.