Smad proteins are intracellular transducers for transforming growth factor-beta (TGF-beta) signaling and play a critical role in differentiation, tissue repair and apoptosis of the central nervous system. Both TGF-beta and its regulated gene, plasminogen activator inhibitor type-1 (PAI-1), have been implicated in the etiology and progression of neurodegenerative diseases and mood disorders. We previously reported that GSK-3beta protein depletion suppresses Smad3/4-dependent gene transcription and causes a reduction in PAI-1 expression. Here, we provide evidence that lithium, the drug for the treatment and prophylaxis of bipolar disorder, inhibits Smad-dependent signaling by regulating cAMP-protein kinase A (PKA), AKT-glycogen synthase kinase-3beta (GSK-3beta), and CRE-dependent signaling pathways in neuron-enriched cerebral cortical cultures of rats. We demonstrate that lithium-induced activation of these pathways inhibits Smad3/4-dependent gene transcription through an increase in pCREB(Ser133) protein levels, an enhanced interaction between pCREB(Ser133) and p300/CBP, which causes Smad3/4-p300/CBP complex disruption and transcriptional suppression of Smad3/4-dependent genes. Therapeutic implications of our findings are discussed.