S100 family of calcium-binding proteins is commonly upregulated in a variety of tumor types and is often associated with tumor progression. Among several S100 members, altered expression of S100A2 is a potential diagnostic and prognostic marker in cancer. Several reports suggest a role for S100A2 in metastasis. Earlier, our studies established regulation of S100A2 by transforming growth factor-β (TGF-β) and its involvement in TGF-β-mediated cancer cell invasion and migration. However, the molecular mechanisms of S100A2 protumorigenic actions remain unexplored. In the present study, we demonstrate that overexpression of S100A2 in A549 lung cancer cells induced epithelial-mesenchymal transition (EMT) followed by increased invasion, loose colony morphology in soft agar and enhanced Akt phosphorylation (Ser-473). Furthermore, overexpression of S100A2 led to increased tumor growth in immunocompromised mice. In agreement, immunohistochemical examination of resected xenograft tumors established inverse correlation between S100A2 and E-cadherin expression together with activated Akt signaling. Interestingly, our study demonstrates a strong dependence of S100A2 and Smad3 in TGF-β-induced Hep3B cell EMT and invasion. Most importantly, we demonstrate that these effects of S100A2 are manifested through functional interaction with Smad3, which is enhanced in the presence of high calcium and TGF-β. S100A2 stabilizes Smad3 and binds to its C-terminal MH2 domain. Additionally, loss of S100A2 attenuates the transcription of TGF-β/Smad3 target genes involved in tumor promotion, such as PA1-1 and vimentin. Collectively, our findings present the first mechanistic details of S100A2 protumorigenic actions and its involvement in TGF-β-mediated cancer cell invasion and EMT.