Transforming growth factor-beta (TGFbeta) induces the expression of the pro-apoptotic protein BIM, and mediates apoptosis in hepatocytes and B lymphocytes. BIM is regulated through a post-translational mechanism involving ERK-dependent phosphorylation and ubiquitin-mediated proteasomal degradation. Here, we show that TGFbeta induces BIM through its rapid inhibition of ERK, thereby preventing the phosphorylation and degradation of BIM. TGFbeta, through a SMAD3-dependent mechanism, transcriptionally induces the mitogen-activated protein kinase (MAPK) phosphatase MKP2, encoded by an immediate early gene, to attenuate ERK and promote the accumulation of BIM protein. Overexpression of MKP2 in hepatocytes modulates ERK-mediated phosphorylation of BIM and apoptosis in the absence of TGFbeta, whereas its ablation in pro-B cells, derived from MKP2-deficient mice, protects cells from TGFbeta-mediated apoptosis, and blocks TGFbeta-induced ERK inhibition and BIM induction. Furthermore, in pro-B cells derived from SMAD3-deficient mice, induction of MKP2 by TGFbeta, inhibition of ERK, induction of BIM and apoptosis do not occur. Our results indicate that MKP2 mediates TGFbeta-dependent apoptosis by linking SMAD3 to the modulation of ERK activity and mitochondrial-mediated pro-apoptotic events.