Transforming growth factor (TGF)-beta stimulation leads to phosphorylation and activation of Smad2 and Smad3, which form complexes with Smad4 that accumulate in the nucleus and regulate transcription of target genes. Here we demonstrate that, following TGF-beta stimulation of epithelial cells, receptors remain active for at least 3-4 hr, and continuous receptor activity is required to maintain active Smads in the nucleus and for TGF-beta-induced transcription. We show that continuous nucleocytoplasmic shuttling of the Smads during active TGF-beta signaling provides the mechanism whereby the intracellular transducers of the signal continuously monitor receptor activity. Our data therefore explain how, at all times, the concentration of active Smads in the nucleus is directly dictated by the levels of activated receptors in the cytoplasm.