Cancer cells often gain advantage by reducing the tumor-suppressive activity of transforming growth factor-beta (TGF-beta) together with stimulation of its oncogenic activity as in Ras-transformed cells; however, molecular mechanisms remain largely unknown. TGF-beta activates both its type I receptor (TbetaRI) and c-Jun NH2-terminal kinase (JNK), which phosphorylate Smad2 and Smad3 at the COOH-terminal (pSmad2/3C) and linker regions (pSmad2/3L). Here, we report that Ras transformation suppresses TbetaRI-mediated pSmad3C signaling, which involves growth inhibition by down-regulating c-Myc. Instead, hyperactive Ras constitutively stimulates JNK-mediated pSmad2/3L signaling, which fosters tumor invasion by up-regulating plasminogen activator inhibitor-1 and matrix metalloproteinase-1 (MMP-1), MMP-2, and MMP-9. Conversely, selective blockade of linker phosphorylation by a mutant Smad3 lacking JNK-dependent phosphorylation sites results in preserved tumor-suppressive function via pSmad3C in Ras-transformed cells while eliminating pSmad2/3L-mediated invasive capacity. Thus, specific inhibition of the JNK/pSmad2/3L pathway should suppress cancer progression by shifting Smad-dependent signaling from oncogenesis to tumor suppression.