BACKGROUND & AIMS: The CYLD lysine 63 deubiquitinase gene (CYLD) encodes tumor suppressor protein that is mutated in familial cylindromatosus, and variants have been associated with Crohn disease (CD). Splice forms of CYLD that lack exons 7 and 8 regulate transcription factors and functions of immune cells. We examined the expression of splice forms of CYLD in colon tissues from patients with CD and their effects in mice. METHODS: We performed immunohistochemical analyses of colon tissues from patients with untreated CD and patients without inflammatory bowel diseases (controls). We obtained mice that expressed splice forms of CYLD (sCYLD mice) without or with SMAD7 (sCYLD/SMAD7 mice) from transgenes and CYLD-knockout mice (with or without transgenic expression of SMAD7) and performed endoscopic analyses. Colitis was induced in Rag1(-/-) mice by transfer of CD4(+) CD62L(+) T cells from C57/Bl6 or transgenic mice. T cells were isolated from mice and analyzed by flow cytometry and quantitative realtime polymerase chain reaction and intestinal tissues were analyzed by histology and immunohistochemistry. CYLD forms were expressed in mouse embryonic fibroblasts, primary T cells, and HEK293T cells, which were analyzed by immunoblot, mobility shift, and immunoprecipitation assays. RESULTS: The colonic lamina propria from patients with CD was infiltrated by T cells and had higher levels of sCYLD (but not full-length CYLD) and SMAD7 than tissues from controls. Incubation of mouse embryonic fibroblasts and T cells with transforming growth factor b increased their production of sCYLD and decreased full-length CYLD. Transgenic expression of sCYLD and SMAD7 in T cells prevented the differentiation of regulatory T cells and T-helper type 17 cells and increased the differentiation of T-helper type 1 cells. The same effects were observed in colon tissues from sCYLD/SMAD7 mice but not in those from CYLD-knockout SMAD7 mice. The sCYLD mice had significant increases in the numbers of T-helper type 1 cells and CD44high CD62Llow memory-effector CD4(+) T cells in the spleen and mesenteric lymph nodes compared with wild-type mice; sCYLD/SMAD7 mice had even larger increases. The sCYLD/ SMAD7 mice spontaneously developed severe colitis, with infiltration of the colon by dendritic cells, neutrophils, macrophages, and CD4(+) T cells and increased levels of Ifng, Il6, Il12a, Il23a, and Tnf mRNAs. Co-transfer of regulatory T cells from wild-type, but not from sCYLD/SMAD7, mice prevented the induction of colitis in Rag1(-/-) mice by CD4(+) T cells. We found increased levels of poly-ubiquitinated SMAD7 in sCYLD CD4(+)T cells. CYLD formed a nuclear complex with SMAD3, whereas sCYLD recruited SMAD7 to the nucleus, which inhibited the expression of genes regulated by SMAD3 and SMAD4. We found that sCYLD mediated lysine 63-linked ubiquitination of SMAD7. The sCYLD-SMAD7 complex inhibited transforming growth factor beta signaling in CD4(+)T cells. CONCLUSIONS: Levels of the spliced form of CYLD are increased in colon tissues from patients with CD. sCYLD mediates ubiquitination and nuclear translocation of SMAD7 and thereby decreases transforming growth factor beta signaling in T cells. This prevents immune regulatory mechanisms and leads to colitis in mice.