Transforming growth factor-β (TGF-β) plays an essential role in chondrocyte maturation. It stimulates chondrocyte proliferation but inhibits chondrocyte differentiation. In this study, we found that TGF-β rapidly induced β-catenin protein levels and signaling in murine neonatal sternal primary chondrocytes. TGF-β-increased β-catenin induction was reproduced by overexpression of SMAD3 and was absent in Smad3-/- chondrocytes treated with TGF-β. SMAD3 inhibited β-transducin repeat-containing protein-mediated degradation of β-catenin and immunoprecipitated with β-catenin following TGF-β treatment. Both SMAD3 and β-catenin co-localized to the nucleus after TGF-β treatment. Although both TGF-β and β-catenin stimulated cyclin D1 expression in chondrocytes, the effect of TGF-β was inhibited with β-catenin gene deletion or SMAD3 loss of function. These results demonstrate that TGF-β stimulates cyclin D1 expression at least in part through activation of β-catenin signaling.