Transforming growth factor-beta superfamily receptors signaling occurs through the Smad family of intracellular mediators. SMAD6 is an inhibitory Smad (i-Smad) that negatively regulates signaling downstream of type I transforming growth factor-beta. Acts as a mediator of TGF-beta and BMP anti-inflammatory activities. Suppresses IL1R-TLR signaling through its direct interaction with PEL1, preventing NF-kappa-B activation, nuclear transport and NF-kappa-B-mediated expression of pro-inflammatory genes. Blocks the BMP-SMAD1 signaling pathway by competing with SMAD4 for receptor-activated SMAD1-binding. Binds to regulatory elements in target promoter regions. Developing heart, eyes and limbs. Belongs to the dwarfin/SMAD family.