Background— Heart failure in diabetics is associated with cardiac hypertrophy, fibrosis and diastolic dysfunction. Activation of transforming growth factor-β/Smad3 signaling in the diabetic myocardium may mediate fibrosis and diastolic heart failure, while preserving matrix homeostasis. We hypothesized that Smad3 may play a key role in the pathogenesis of cardiovascular remodeling associated with diabetes mellitus and obesity. Methods and Results— We generated leptin-resistant db/db Smad3 null mice and db/db Smad3+/− animals. Smad3 haploinsufficiency did not affect metabolic function in db/db mice, but protected from myocardial diastolic dysfunction, while causing left ventricular chamber dilation. Improved cardiac compliance and chamber dilation in db/db Smad3+/− animals were associated with decreased cardiomyocyte hypertrophy, reduced collagen deposition, and accentuated matrix metalloproteinase activity. Attenuation of hypertrophy and fibrosis in db/db Smad3+/− hearts was associated with reduced myocardial oxidative and nitrosative stress. db/db Smad3 null mice had reduced weight gain and decreased adiposity associated with attenuated insulin resistance, but also exhibited high early mortality, in part, because of spontaneous rupture of the ascending aorta. Ultrasound studies showed that both lean and obese Smad3 null animals had significant aortic dilation. Aortic dilation in db/db Smad3 null mice occurred despite reduced hypertension and was associated with perturbed matrix balance in the vascular wall. Conclusions— Smad3 mediates diabetic cardiac hypertrophy, fibrosis, and diastolic dysfunction, while preserving normal cardiac geometry and maintaining the integrity of the vascular wall.