Loss of TGF-β growth-inhibitory responses is a hallmark of human cancer. However, the molecular mechanisms underlying the TGF-β resistance of cancer cells remain to be fully elucidated. Splicing factor proline- and glutamine-rich (SFPQ) is a prion-like RNA-binding protein that is frequently upregulated in human cancers. In this study, we identified SFPQ as a potent suppressor of TGF-β signaling. The ability of SFPQ to suppress TGF-β responses depends on its prion-like domain (PrLD) that drives liquid-liquid phase separation (LLPS). Mechanistically, SFPQ physically restrained Smad4 in its condensates, which excluded Smad4 from the Smad complex and chromatin occupancy and thus functionally dampened Smad-dependent transcriptional responses. Accordingly, SFPQ deficiency or loss of phase separation activities rendered human cells hypersensitive to TGF-β responses. Together, our data identify an important function of SFPQ through LLPS that suppresses Smad transcriptional activation and TGF-β tumor-suppressive activity.