Transforming growth factor beta (TGF-beta) plays a critical role in tissue fibrosis. The duration and intensity of TGF-beta signaling are tightly regulated. Here we report that TSC-22 (TGF-beta-stimulated clone 22) facilitates TGF-beta signaling by antagonizing Smad7 activity to increase receptor stability. TSC-22 enhances TGF-beta-induced Smad2/3 phosphorylation and transcriptional responsiveness. The stimulatory effect of TSC-22 is dependent on Smad7, as silencing Smad7 expression abolishes it. TSC-22 interacts with TGF-beta type I receptor T beta RI and Smad7 in mutually exclusive ways and disrupts the association of Smad7/Smurfs with T beta RI, thereby preventing ubiquitination and degradation of the receptor. We also found that TSC-22 can promote the differentiation of cardiac myofibroblasts by increasing expression of the fibrotic genes for alpha-smooth muscle actin (alpha-SMA), PAI-1, fibronectin, and collagen I, which is consistent with upregulation of TSC-22, phospho-Smad2/3, and the fibrotic genes in isoproterenol-induced rat myocardial fibrotic hearts. Taken together with the notion that TGF-beta induces TSC-22 expression, our findings suggest that TSC-22 regulates TGF-beta signaling via a positive-feedback mechanism and may contribute to myocardial fibrosis.