In Caenorhabditis elegans, two well-characterized TGF beta signaling cascades have been identified: the Small/Male tail abnormal (Sma/Mab) and Dauer formation (Daf) pathways. The Sma/Mab pathway regulates body size morphogenesis and male tail development. The ligand of the pathway, dbl-1, transmits its signal through two receptor serine threonine kinases, daf-4 and sma-6, which in turn regulate the activity of the Smads, sma-2, sma-3, and sma-4. In general, Smads have been shown to both positively and negatively regulate the transcriptional activity of downstream target genes in various organisms. In C. elegans, however, target genes have remained elusive. We have cloned and characterized lon-1, a gene with homology to the cysteine-rich secretory protein (CRISP) family of proteins. lon-1 regulates body size morphogenesis, but does not affect male tail development. lon-1 is expressed in hypodermal tissues, which is the focus of body size determination, similar to sma-2, sma-4, and sma-6. Using genetic methods, we show that lon-1 lies downstream of the Sma/Mab signaling cascade and demonstrate that lon-1 mRNA levels are up-regulated in sma-6-null mutant animals. This provides evidence that lon-1 is negatively regulated by Sma/Mab pathway signaling. Taken together, these data identify lon-1 as a novel downstream target gene of the dbl-1 TGF beta-like signaling pathway.