Abstract The role of Smad4 in transforming growth factor β (TGFβ)–mediated epithelial-mesenchymal transition (EMT), invasion, and metastasis was investigated using isogenically matched pancreatic cancer cell lines that differed only in expression of Smad4. Cells expressing Smad4 showed an enhanced TGFβ-mediated EMT as determined by increased expression of vimentin and decreased expression of β-catenin and E-cadherin. TGFβ-mediated invasion was suppressed in Smad4-intact cells as determined by in vitro assays, and these cells showed a reduced metastasis in an orthotopic model of pancreatic cancer. Interestingly, TGFβ inhibited STAT3Tyr705 phosphorylation in Smad4-intact cells. The decrease in STAT3Tyr705 phosphorylation was linked to a TGFβ/Smad4-dependent and enhanced activation of extracellular signal-regulated kinases, which caused an increase in serine phosphorylation of STAT3Ser727. Down-regulating signal transducer and activator of transcription 3 (STAT3) expression by short hairpin RNA in Smad4-deficient cells prevented TGFβ-induced invasion. Conversely, expressing a constitutively activated form of STAT3 (STAT3-C) in Smad4-intact cells enhanced invasion. This study indicates the requirement of STAT3 activity for TGFβ-induced invasion in pancreatic cancer cells and implicates Smad4-dependent signaling in regulating STAT3 activity. These findings further suggest that loss of Smad4, leading to aberrant activation of STAT3, contributes to the switch of TGFβ from a tumor-suppressive to a tumor-promoting pathway in pancreatic cancer. [Cancer Res 2008;68(11):4221–8]