The role of Smad4 in transforming growth factor beta (TGFbeta)-mediated epithelial-mesenchymal transition (EMT), invasion, and metastasis was investigated using isogenically matched pancreatic cancer cell lines that differed only in expression of Smad4. Cells expressing Smad4 showed an enhanced TGFbeta-mediated EMT as determined by increased expression of vimentin and decreased expression of beta-catenin and E-cadherin. TGFbeta-mediated invasion was suppressed in Smad4-intact cells as determined by in vitro assays, and these cells showed a reduced metastasis in an orthotopic model of pancreatic cancer. Interestingly, TGFbeta inhibited STAT3(Tyr705) phosphorylation in Smad4-intact cells. The decrease in STAT3(Tyr705) phosphorylation was linked to a TGFbeta/Smad4-dependent and enhanced activation of extracellular signal-regulated kinases, which caused an increase in serine phosphorylation of STAT3(Ser727). Down-regulating signal transducer and activator of transcription 3 (STAT3) expression by short hairpin RNA in Smad4-deficient cells prevented TGFbeta-induced invasion. Conversely, expressing a constitutively activated form of STAT3 (STAT3-C) in Smad4-intact cells enhanced invasion. This study indicates the requirement of STAT3 activity for TGFbeta-induced invasion in pancreatic cancer cells and implicates Smad4-dependent signaling in regulating STAT3 activity. These findings further suggest that loss of Smad4, leading to aberrant activation of STAT3, contributes to the switch of TGFbeta from a tumor-suppressive to a tumor-promoting pathway in pancreatic cancer.