We provide detailed mechanisms of Ahnak-mediated potentiation of transforming growth factor β (TGFβ) signaling, which leads to a negative regulation of cell growth. We show that Smad3 interacts with Ahnak through MH2 domain and that Ahnak stimulates Smad3 localization into nucleus leading to potentiating TGFβ-induced transcriptional activity of R-Smad. Moreover, overexpression of Ahnak resulted in growth retardation and cell cycle arrest through downregulation of c-Myc and cyclin D1/D2. We describe results from analyses of Ahnak-/-mouse model expressing middle T antigen in a mammary gland-specific manner (MMTV Tg/+ Ahnak-/-), which showed significantly progressed hyperplasia of mammary glands compared with MMTV Tg/+ Ahnak +/+. Finally, we screened multiple human breast cancer tissues and showed that the expression of Ahnak in cancer tissues is lower than that in control tissues by 50%. Taken together, these data indicate that Ahnak mediates a negative regulation of cell growth and acts as novel tumor suppressor through potentiation of TGFβ signaling.