Homeobox (Hox) gene mutations and their altered expressions are frequently linked to human leukemia. Here, we report that transforming growth factor β (TGFβ)/bone morphogenetic protein (BMP) inhibits the bone marrow transformation capability of Hoxa9 and Nup98-Hoxa9, the chimeric fusion form of Hoxa9 identified in human acute myeloid leukemia (AML), through Smad4, the common Smad (Co-Smad) in the TGFβ/BMP signaling pathway. Smad4 interacts directly with the homeodomain of Hoxa9 and blocks the ability of Nup98-Hoxa9 to bind DNA, thereby suppressing its ability to regulate downstream gene transcription. Mapping data revealed that the amino-terminus of Smad4 mediates this interaction and overexpression of the Hoxa9 interaction domain of Smad4 was sufficient to inhibit the enhanced serial replating ability of primary bone marrow cells induced by Nup98-Hoxa9. These studies establish a novel mechanism by which TGFβ/BMP regulates hematopoiesis and suggest that modification of Hox DNA-binding activity may serve as a novel therapeutic intervention for those leukemias that involve deregulation of Hox. © 2006 European Molecular Biology Organization | All Rights Reserved.