Smad6 and Smad7, a subgroup of Smad proteins, antagonize the signals elicited by transforming growth factor-beta, These two Smads, induced by transforming growth factor-beta or bone morphogenetic protein (BMP) stimulation, form stable associations with their activated type I receptors, blocking phosphorylation of receptor-regulated Smads in the cytoplasm, Here we show that Smad6 interacts with homeobox (Hox) c-8 as a transcriptional corepressor, inhibiting BMP signaling in the nucleus. The interaction between Smad6 and Hoxc-8 was identified by a yeast two-hybrid approach and further demonstrated by co immunoprecipitation assays in cells. Gel shift assays show that Smad6, but not Smad7, interacts with both Hoxc-8 and Hoxa-9 as a heterodimer when binding to DNA. More importantly, the Smad6-Hoxc-8 complex inhibits interaction of Smad1 with Hoxc-8- and Smad1-induced transcription activity. These data indicate that Smad6 interacts with Hox transcription factors as part of the negative feedback circuit in the BMP signaling pathway.