Transforming growth factor-beta (TGF-beta) and bone morphogenetic proteins (BMPs) signal via distinct type I and type II receptors and Smad proteins. A nine amino acid sequence between kinase subdomains IV and V in type I receptors, termed the L45 loop, has been shown to be important in conferring signalling specificity. We examined the responses of a mutant TGF-beta type I receptor (TbetaR-I) and a mutant BMPR-IB, in which the L45 regions of these two receptors were exchanged. Swapping the four amino acid residues that are different in BMPR-IB for those in TbetaR-I, and vice versa, switched their type I receptor-restricted Smad activation and specificity in transcriptional responses. These studies identify the L45 loop regions in type I receptors as critical determinants in specifying Smad isoform activation.