Patients with idiopathic pulmonary fibrosis (IPF) have an increased risk of developing lung cancer. To identify key molecules involved in malignant transformation in IPF, we analyzed the expression profiles of lung and lung tumor tissue from patients with lung cancer and IPF (lung cancer/IPF) using cDNA arrays and real-time quantitative reverse transcriptase-polymerase chain reaction (RT-PCR). Reduced expression of the Smad4 gene was identified in all eight tumor samples from the lung cancer/IPF patients using real-time RT-PCR. Expression levels of Smad4 were significantly lower in tumors from lung cancer/IPF patients than in those from lung cancer patients without IPF or in lung cancer cell lines (p<0.01). Mutational analysis of TGF-β type II receptor and Smad4 was performed using polymerase chain reaction-single strand conformation polymorphism (PCR-SSCP). The methylation status of the Smad4 promoter was analyzed using methylation-specific PCR with subsequent sequence analysis. No mutations were detected in the eight tumor samples, but hypermethylated regions were detected in the Smad4 promoter in two of the eight tumors with reduced Smad4 expression. Promoter reporter assays showed that the activity of the Smad4 promoter containing the sequence of the methylated region was significantly stronger than that of the Smad4 promoter with a deleted methylated region (p<0.002). Our findings indicate that the loss of the growth inhibitory response to TGF-β signaling may be crucial in pulmonary carcinogensis or in the progression of lung cancer in IPF patients in whom TGF-β is overexpressed; hypermethylation of the Smad4 promoter region may be one mechanism by which this occurs. These findings are useful for the development of preventive measures or treatment for lung cancer patients with IPF.