Transforming growth factor beta (TGF-beta) is a multifunctional factor that regulates many aspects of cellular functions. TGF-beta signals through a heteromeric complex of the type I and type II TGF-beta receptors. However, the molecular mechanism of signal transduction by this receptor complex remains unresolved. The type II receptor belongs to a transmembrane receptor serine-threonine kinase family. A new member of this receptor family (R4) was identified and shown to be a functional TGF-beta type I receptor on the basis of its ability to restore a TGF-beta-induced gene response in mutant cell lines lacking endogenous type I receptor. Both ligand binding and signaling of the R4 protein were dependent on the presence of a functional type II receptor. The type I receptor has an intrinsic serine-threonine kinase activity, which was essential for signal transduction.