Alterations in genes encoding transforming growth factor-beta-signaling components contribute to colon cancer in humans. Similarly, mice deficient in the transforming growth factor-beta signaling molecule, Smad3, develop colon cancer, but only after a bacterial trigger occurs, resulting in chronic inflammation. To determine whether Smad3-null lymphocytes contribute to increased cancer susceptibility, we crossed Smad3-null mice with mice deficient in both B and T lymphocytes (Rag2(-/-) mice). Helicobacter-infected Smad3/Rag2-double knockout (DKO) mice had more diffuse inflammation and increased incidence of adenocarcinoma compared with Helicobacter-infected Smad3(-/-) or Rag2(-/-) mice alone. Adoptive transfer of WT CD4(+)CD25(+) T-regulatory cells provided significant protection of Smad3/Rag2-DKO from bacterial-induced typhlocolitis, dysplasia, and tumor development, whereas Smad3(-/-) T-regulatory cells provided no protection. Immunohistochemistry, real-time reverse transcriptase-polymerase chain reaction, and Western blot analyses of colonic tissues from Smad3/Rag2-DKO mice 1 week after Helicobacter infection revealed an influx of macrophages, enhanced nuclear factor-kappaB activation, increased Bcl(XL)/Bcl-2 expression, increased c-Myc expression, accentuated epithelial cell proliferation, and up-regulated IFN-gamma, IL-1alpha, TNF-alpha, IL-1beta, and IL-6 transcription levels. These results suggest that the loss of Smad3 increases susceptibility to colon cancer by at least two mechanisms: deficient T-regulatory cell function, which leads to excessive inflammation after a bacterial trigger; and increased expression of proinflammatory cytokines, enhanced nuclear factor-kappaB activation, and increased expression of both pro-oncogenic and anti-apoptotic proteins that result in increased cell proliferation/survival of epithelial cells in colonic tissues.