Osteosarcoma is a prevalent malignant bone tumor with a poor prognosis. Mothers against decapentaplegic homolog 3 (Smad3) present as a therapeutic target in antitumor treatment, whereas its functions in the osteosarcoma have not been well explored. In the current study, we aimed to investigate the effects of Smad3 in the progression of osteosarcoma. The tumor immune single-cell hub 2 website was used for graph-based visualization of Smad3 status in osteosarcoma single-cell database. Western Blot was applied to detect the expression of Smad3 protein in cell lines. Colony formation and cell counting kit-8 assays were used to evaluate cell proliferation. Transwell and wound healing assays were used to detect the migration and invasion abilities of cells. Cell apoptosis rates and cell cycle changes were explored by using flow cytometry analysis. The xenograft tumor growth model was applied to explore the effect in tumor growth after Smad3 blockage in vivo. Moreover, to confirm the potential mechanism of Smad3's effects on osteosarcoma, bioinformatics analysis was performed in TARGET-Osteosarcoma and GSE19276 databases. Our study found that the Smad3 protein is overexpressed in 143B and U2OS cells, suppressing the expression of Smad3 protein in osteosarcoma cells by Smad3 target inhibitor (E)-SIS3 or lentivirus can inhibit the proliferation, migration, invasion, promote cell apoptosis, arrest cell G1 cycle in osteosarcoma cells in vitro, and suppress tumor growth in vivo. Furthermore, the bioinformatics analysis demonstrated that high expression of Smad3 is closely associated with low immune status in TARGET-Osteosarcoma and GSE19276 databases. Our study suggested that Smad3 could contribute positively to osteosarcoma progression via the regulation of tumor immune microenvironment, and Smad3 may represent as an valuable potential therapeutic target in osteosarcoma therapy.