BackgroundMuch is known about the three subfamilies of the TGFβ superfamily in vertebrates—the TGFβs, dpp/BMPs, and activins. Signalling in each subfamily is dependent on both shared and unique cell surface receptors and Smads. In invertebrates, mutants for BMP pathway components have been extensively characterized, but thus far, evidence for an activin‐ or TGFβ‐like pathway has been lacking, preventing the use of the extensive genetic tools available for studying several key issues of TGFβ signalling.ResultsHere we report the identification of dSmad2, a new Drosophila Smad which is most related to the activin/TGFβ‐pathway Smads, Smad2 and Smad3. We show that dSmad2 induces activin responsive genes in Xenopus animal cap assays. dSMAD2 is phosphorylated by ATR‐I and PUNT, but not by activated THICK VEINS, and translocates to the nucleus upon activation. Furthermore, we show that dSMAD2 complexes with MEDEA only in the presence of ATR‐I and PUNT. dSmad2 is expressed in the imaginal disks and in the outer proliferation centre of the larval brain, suggesting that it may have important proliferative and patterning roles during Drosophila development.ConclusionOur data provide evidence for the existence of an activin/TGFβ pathway in Drosophila. We show that dSmad2 participates in this pathway, and that it functions with Atr‐I and punt. We show that Medea also participates in this pathway, indicating the conservation of roles for Co‐Smads in diverse phyla. Expression patterns of dSmad2 suggest that it functions in imaginal disks and in the brain, in tissues that undergo extensive patterning and proliferation.