TMED1 disrupts the complex formation between TGF-beta type I (also termed ALK5) and type II receptors (TbetaRII). Misexpression studies revealed that TMED1 attenuated TGF-beta-mediated signaling. A 2-amino acid-long region from Thr(91) to Glu(11) within the extracellular region of TMED1 was found to be crucial for TMED1 interaction with both ALK5 and TbetaRII. Synthetic peptides corresponding to this region inhibit both TGF-beta-induced Smad2 phosphorylation and Smad-dependent transcriptional reporter activity. In a xenograft cancer model, where previously TGF-beta was shown to elicit tumor-promoting effects, gain-of-function and loss-of-function studies for TMED1 revealed a decrease and increase in the tumor size, respectively. That TMED1 expression levels are the key determinant for efficiency of TGF-beta receptor complex formation and signaling.