Protein dynamics, modifications and trafficking are all processes that can modulate protein activity. Accumulating evidence strongly suggests that many proteins have distinctive roles dependent on cellular location. Nonsteroidal anti-inflammatory drug-activated gene-1 (NAG-1) is a transforming growth factor-β (TGF-β) superfamily protein that has a role in cancer, obesity and inflammation. NAG-1 is synthesized and cleaved into a mature peptide, which is ultimately secreted into the extracellular matrix (ECM). In this study, we have found that full-length NAG-1 is expressed in not only the cytoplasm and ECM, but also in the nucleus. NAG-1 is dynamically moved to the nucleus, exported into cytoplasm and further transported into the ECM. We have also found that nuclear NAG-1 contributes to inhibition of the Smad pathway by interrupting the Smad complex. Overall, our study indicates that NAG-1 is localized in the nucleus and provides new evidence that NAG-1 controls transcriptional regulation in the Smad pathway.