Inhibin is a secreted tumor suppressor and an activin antagonist. Inhibin null mice develop gonadal sex cord-stromal tumors with 100% penetrance and die of a cachexia-like syndrome due to increased activin signaling. Since SMAD2 and SMAD3 transduce activin signals in vitro, we attempted to define the role of SMAD3 in gonadal tumorigenesis and the wasting syndrome by generating inhibin and Smad3 double mutant mice. Inhibin and Smad3 double homozygous males were protected from early tumorigenesis and the usual weight loss and death. Approximately 90% of these males survived to 26 weeks in contrast to 95% of inhibin-deficient males which develop bilateral testicular tumors and die of the wasting syndrome by 12 weeks. Testicular tumors were either absent or unilaterally slow-growing and less hemorrhagic in the majority of double knockout males. In contrast, development of the ovarian tumors and wasting syndrome was delayed, but still occurred, in the majority of the double-knockout females by 26 weeks. In double mutant females, tumor development was accompanied by typical activin-induced pathological changes. In summary, we identify an important function of SMAD3 in gonadal tumorigenesis in both sexes. However, this effect is significantly more pronounced in the male indicating that SMAD3 is the primary transducer of male gonadal tumorigenesis, while SMAD3 potentially overlaps with SMAD2 function in the ovary. Moreover, the activin-induced cachexia syndrome is potentially mediated through both SMAD2 and SMAD3 or only through SMAD2 in the liver and stomach. These studies identify sexually dimorphic functions of SMAD3 in gonadal tumorigenesis.