Mutations in SMAD tumor suppressor genes are involved in approximately 140,000 new cancers in the USA each year. At this time, how the absence of a functional SMAD protein leads to a tumor is unknown. However, clinical and biochemical studies suggest that all SMAD mutations are loss-of-function mutations. One prediction of this hypothesis is that all SMAD mutations cause tumors via a single mechanism. To test this hypothesis, we expressed five tumor-derived alleles of human SMAD genes and five mutant alleles of Drosophila SMAD genes in flies. We found that all of the DNA-binding domain mutations conferred gain-of-function activity, thereby falsifying the hypothesis. Furthermore, two types of gain-of-function mutation were identified - dominant negative and neomorphic. In numerous assays, the neomorphic allele SMAD4(100T) appears to be capable of activating the expression of WG target genes. These results imply that SMAD4(100T) may induce tumor formation by a fundamentally different mechanism from other SMAD mutations, perhaps via the ectopic expression of WNT target genes - an oncogenic mechanism associated with mutations in Adenomatous Polyposis Coli. Our results are likely to have clinical implications, because gain-of-function mutations may cause tumors when heterozygous, and the life expectancy of individuals with SMAD4(100T) is likely to be different from those with other SMAD mutations. From a larger perspective, our study shows that the genetic characterization of missense mutations, particularly in modular proteins, requires experimental verification.