To address the functional significance of TGF-b signaling in airway epithelium in allergic airways disease and lung carcinogenesis, we disrupted the in vivo TGF-b signaling by exogenous expression of Smad7 specifically in the airway epithelium. We generated a transgenic construct by placing Smad7 under the transcriptional control of CC10 promoter to express Smad7 specifically in Clara cells, which are postulated to be pivotal in forming the cell lineage of the bronchiolar epithelium. A Myc-tag was constructed at the N-terminus of Smad7 transcript to facilitate detection of the transgene expression in the animals. Oroxin-B Previous study showed that the inhibitory activity of Smad7 was not affected by this Myc-tag. The plasmid construct was linearized and used in microinjection to generate the transgenic mice. The mouse founders were identified by genotyping using genomic DNA isolated from the mouse tails. From a total of 83 offspring in the B6CBF1 background given by the pseudopregnant foster mothers, 8 founders were identified to carry the transgene. All mice positive for the transgene showed no signs of health problems up to 1 year of age as compared with the wild type littermates. In this study, we specifically blocked TGF-b signaling in airway epithelium by overexpression Smad7 in Clara cells. The contribution of TGF-b signaling specifically in Clara cells in allergic asthma and lung Typhaneoside cancer was investigated. Using the transgenic mouse model, our studies uncover for the first time the important function of TGF-b signaling in airway epithelium itself in the development of allergic asthma and lung cancer. Blocking TGF-b signaling in Clara cells appears to have a protective role in OVA-induced asthma, while it can increase the incidence of urethane-induced lung cancer. Allergic asthma is a complex disorder and the pathogenesis of this disease can be regarded as a two-step phenomenon. The first step consists of sensitization to an aeroallergen and preferential activation of antigen specific Th2 cells. The second step involves targeting the Th2-driven allergic inflammation to the lower airway.