Transforming growth factor-β (TGF-β) is a potent inducer of apoptosis in B-lymphocytes and is essential for immune regulation and maintenance of self-tolerance. Here we show that concomitant signaling through CD40 sustains proliferation and rescues the premature B cell line WEHI 231 from both TGF-β-induced and anti-IgM-induced apoptosis. The anti-apoptotic effect of CD40 is associated with the transcriptional activation of the inhibitory Smad7 protein. The transactivation of Smad7 by CD40 is NFκB-dependent in that pharmacological inhibitors of this pathway, N-tosyl-L-phenylalanine chloromethyl ketone and pyrrolidine dithiocarbamate, abrogate CD40-induced Smad7 expression. Ectopic overexpression of Smad7 inhibited Smad2 activation, TGF-β-mediated growth inhibition, and apoptosis in WEHI 231 cells. Consistent with this result, dominant negative interference with Smad2 and Smad3 function also inhibited TGF-β-induced apoptosis. The inhibitory effects of Smad7 overexpression were specific to TGF-β-induced apoptosis and were without effect on anti-IgM-induced cell death. These results suggest a mechanism of suppression of TGF-β-induced apoptosis by CD40, mediated through activation of NF-κB and, consequently, induction of Smad7 expression.