Although Smad3 is a key mediator for fibrosis, its functional role and mechanisms in hypertensive nephropathy remain largely unclear. This was examined in the present study in a mouse model of hypertension induced in Smad3 knockout (KO) and wild-type (WT) mice by subcutaneous angiotensin II infusion and in vitro in mesangial cells lacking Smad3. After angiotensin II infusion, both Smad3 KO and WT mice developed equally high levels of blood pressure. However, disruption of Smad3 prevented angiotensin II-induced kidney injury by lowering albuminuria and serum creatinine (P < 0.01), inhibiting renal fibrosis such as collagen type I and IV, fibronectin, and α-SMA expression (all P < 0.01), and blocking renal inflammation including macrophage and T cell infiltration and upregulation of IL-1β, TNF-α, and monocyte chemoattractant protein-1 in vivo and in vitro (all P < 0.001). Further studies revealed that blockade of angiotensin II-induced renal transforming growth factor (TGF)-β1 expression and inhibition of Smurf2-mediated degradation of renal Smad7 are mechanisms by which Smad3 KO mice were protected from angiotensin II-induced renal fibrosis and NF-κB-driven renal inflammation in vivo and in vitro. In conclusion, Smad3 is a key mediator of hypertensive nephropathy. Smad3 promotes Smurf2-dependent ubiquitin degradation of renal Smad7, thereby enhancing angiotensin II-induced TGF-β/Smad3-mediated renal fibrosis and NF-κB-driven renal inflammation. Results from this study suggest that inhibition of Smad3 or overexpression of Smad7 may be a novel therapeutic strategy for hypertensive nephropathy.