Genetic studies have identified Protocadherin-1 (PCDH1) and Mothers against decapentaplegic homolog-3 (SMAD3) as susceptibility genes for asthma. PCDH1 is expressed in bronchial epithelial cells and has been found to interact with SMAD3 in yeast two-hybrid (Y2H) overexpression assays. Here, we test whether PCDH1 and SMAD3 interact at endogenous protein levels in bronchial epithelial cells and evaluate the consequences thereof for transforming growth factor-alpha 1 (TGF-beta 1)-induced gene transcription. We performed Y2H screens and coimmunoprecipitation (co-IP) experiments of PCDH1 and SMAD3 in HEK293T and 16HBE14o(-) (16HBE) cell lines. Activity of a SMAD3-driven luciferase reporter gene in response to TGF-beta 1 was measured in BEAS-2B cells transfected with PCDH1 and in 16HBE cells transfected with PCDH1-small-interfering RNA (siRNA). TGF-beta 1-induced gene expression was quantified in BEAS-2B clones overexpressing PCDH1 and in human primary bronchial epithelial cells (PBECs) transfected with PCDH1-siRNA. We confirm PCDH1 and SMAD3 interactions by Y2H and by co-IP in HEK293T cells over-expressing both proteins, and at endogenous protein levels in 16HBE cells. TGF-beta-induced activation of a SMAD3-driven reporter was reduced by exogenous PCDH1 in BEAS2B cells, whereas it was increased by siRNA-mediated knockdown of endogenous PCDH1 in 16HBE cells. Overexpression of PCDH1 suppressed expression of TGF-beta target genes in BEAS-2B cells, whereas knockdown of PCDH1 in human PBECs increased TGF-beta-induced gene expression. In conclusion, we demonstrate that PCDH1 binds to SMAD3 and regulates its activation by TGF-beta signaling in bronchial epithelial cells. We propose that PCDH1 and SMAD3 act in a single pathway in asthma susceptibility that affects sensitivity of the airway epithelium to TGF-beta.