Signal transduction pathways induced by cytokines can modulate the level of HIV-1 gene transcription and replication in a variety of cells including those from the central nervous system. Here, we investigated the effect of TGFbeta-1 signaling the factors, including Smads, on transcription of the viral LTR in human astrocytic cells. Ectopic expression of Smad-3 increased activity of the viral promoter, while its partner protein, Smad-4, caused a slight decrease in viral gene transcription. Further, Smad-4 was able to suppress transcriptional activation of the LTR by Smad-3 as well as by C/EBPbeta, another activator of LTR transcription in these cells. Results from promoter deletion experiments identified the C/EBP-binding site, which is positioned between nucleotides -114 and -102 as one of the targets for Smad-mediated regulation of the LTR. Band-shift studies showed inhibition of C/EBP binding to its target DNA in protein extract from cells overexpressing Smad-3 and Smad-4. Results from GST pull-down assay and combined immunoprecipitation/Western blot of protein extracts from human astrocytes verified the association of Smad-3 and Smad-4 with C/EBPbeta, suggesting that interaction of C/EBPbeta with Smad-3 and Smad-4 may have a negative impact upon C/EBPbeta-mediated activation of the LTR. Interestingly, Smad-4 showed no inhibitory effect on viral gene transcription in cells expressing Tat protein. However, in the presence of Smad-3, expression of Smad-4 exerted a negative effect on Tat-mediated activation of the LTR promoter. These observations pointed to the functional interplay between viral and cellular proteins in modulating LTR transcription.