The tumor suppressor SMAD4, also known as DPC4, deleted in pancreatic cancer, is a central mediator of TGF-beta signaling. It was previously shown that mice homozygous for a null mutation of Smad4 (Smad4-/-) died prior to gastrulation displaying impaired extraembryonic membrane formation and endoderm differentiation. Here we show that Smad4+/- mice began to develop polyposis in the fundus and antrum when they were over 6 - 12 months old, and in the duodenum and cecum in older animals at a lower frequency. With increasing age, polyps in the antrum show sequential changes from hyperplasia, to dysplasia, in-situ carcinoma, and finally invasion. These alterations are initiated by a dramatic expansion of the gastric epithelium where Smad4 is expressed. However, loss of the remaining Smad4 wild-type allele was detected only in later stages of tumor progression, suggesting that haploinsufficiency of Smad4 is sufficient for tumor initiation. Our data also showed that overexpression of TGF-beta1 and Cyclin D1 was associated with increased proliferation of gastric polyps and tumors. These studies demonstrate that Smad4 functions as a tumor suppressor in the gastrointestinal tract and also provide a valuable model for screening factors that promote or prevent gastric tumorigenesis.