Transforming growth factor β(TGFβ) has both positive and negative effects on cutaneous wound healing. Smad7 acts as a major downstream antagonist of TGFβ signaling in keratinocytes and its role in wound healing has not been defined. We have established a Smad7 transgenic mouse line using a keratin 5 (K5) promoter (K5.Smad7) which expresses Smad7 transgene at a mild level (∼2 fold of the endogenous Smad7 in the skin). These mice did not have overt skin defects as shown from our previous Smad7 transgenic mice expressing much higher levels of the Smad7 transgene (EMBO J 2002, 21:2580–90). K5.Smad7 mice from the above low expressor line and non‐transgenic littermates were subject to 6‐mm full‐thickness excisional wounding. K5.Smad7 mice exhibited early scab rejection, reduced inflammation, and accelerated re‐epithelialization as compared to non‐transgenic mice. To further determine the stage‐specific effects of Smad7 on wound healing, we generated a transgenic model in which Smad7 transgene expression can be induced in the epidermis and hair follicles (gene‐switch‐Smad7) by topically RU486 application. Smad7 induction from day 3 to day 7 after excisional wounding reduced inflammatory responses through suppressing expression of a variety of inflammatory cytokines/chemokines in gene‐switch‐Smad7 mice as compared to control mice. Meanwhile, overexpression of Smad7 exhibited accelerated re‐epithelialization, which correlated with increased expression of metalloproteinases and elevated Erk (extracellular signal‐regulated kinases) signaling in the leading epidermal edges in gene‐switch‐Smad7 wounds compared to control wounds. Smad7 induction from day 7 to day 20 after excisional wounding reduced dermal fibrotic response and angiogenesis in the dermis, resulting in a better tissue repair. We conclude that the effectsof Smad7 on wound healing are likely due to blocking the negative effects of TGFβ on cutaneous wound healing.