Chronic kidney disease (CKD) has emerged as a major cause of morbidity and mortality worldwide. Interstitial fibrosis, glomerulosclerosis and inflammation play the central role in the pathogenesis and progression of CKD to end stage renal disease (ESRD). Transforming growth factor-β1 (TGF-β1) is the central mediator of renal fibrosis and numerous studies have focused on inhibition of TGF-β1 and its downstream targets for treatment of kidney disease. However, blockade of TGF-β1 has not been effective in the treatment of CKD patients. This may be, in part due to anti-inflammatory effect of TGF-β1. The Smad signaling system plays a central role in regulation of TGF-β1 and TGF-β/Smad pathway plays a key role in progressive renal injury and inflammation. This review provides an overview of the role of TGF-β/Smad signaling pathway in the pathogenesis of renal fibrosis and inflammation and an effective target of anti-fibrotic therapies. Under pathological conditions, Smad2 and Smad3 expression are upregulated, while Smad7 is downregulated. In addition to TGF-β1, other pathogenic mediators such as angiotensin II and lipopolysaccharide activate Smad signaling through both TGF-β-dependent and independent pathways. Smads also interact with other pathways including nuclear factor kappa B (NF-κB) to regulate renal inflammation and fibrosis. In the context of renal fibrosis and inflammation, Smad3 exerts profibrotic effect, whereas Smad2 and Smad7 play renal protective roles. Smad4 performs its dual functions by transcriptionally promoting Smad3-dependent renal fibrosis but simultaneously suppressing NF-κB-mediated renal inflammation via Smad7-dependent mechanism. Furthermore, TGF-β1 induces Smad3 expression to regulate microRNAs and Smad ubiquitination regulatory factor (Smurf) to exert its pro-fibrotic effect. In conclusion, TGF-β/Smad signaling is an important pathway that mediates renal fibrosis and inflammation. Thus, an effective anti-fibrotic therapy via inhibition of Smad3 and upregulation of Smad7 signaling constitute...