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Pancreatic β-cell loss and dysfunction are critical components of all types of diabetes. Human and rodent β-cells are able to proliferate, and this proliferation is an important defense against the evolution and progression of diabetes. Transforming growth factor-β (TGF-β) signaling has been shown to affect β-cell development, proliferation, and function, but β-cell proliferation is thought to be the only source of new β-cells in the adult. Recently, β-cell dedifferentiation has been shown to be an important contributory mechanism to β-cell failure. In this study, we tie together these two pathways by showing that a network of intracellular TGF-β regulators, smads 7, 2, and 3, control β-cell proliferation after β-cell loss, and specifically, smad7 is necessary for that β-cell proliferation. Importantly, this smad7-mediated proliferation appears to entail passing through a transient, nonpathologic dedifferentiation of β-cells to a pancreatic polypeptide--fold hormone-positive state. TGF-β receptor II appears to be a receptor important for controlling the status of the smad network in β-cells. These studies should help our understanding of properly regulated β-cell replication. Diabetes 2014;63:224-236 | DOI: 10.2337/db13-0432, New pancreatic β-cells form in response to a loss of β-cell mass, and this formation of new β-cells is thought to be an important defense against the evolution and progression [...]