The mutant protein FOXL2 is expressed in at least 95% of adult-type ovarian granulosa cell tumors (AGCT) and is considered to be a driver of oncogenesis in this disease. However, the molecular mechanism by which FOXL2 contributes to tumorigenesis is not known. Here, we show that mutant FOXL2 acquires the ability to bind SMAD4, forming a FOXL2/SMAD4/SMAD2/3 complex that binds a novel hybrid DNA motif AGHCAHAA, unique to the FOXL2 mutant. This binding induced an enhancer-like chromatin state, leading to transcription of nearby genes, many of which are characteristic of epithelial-to-mesenchymal transition. FOXL2 also bound hybrid loci in primary AGCT. Ablation of SMAD4 or SMAD2/3 resulted in strong reduction of FOXL2 binding at hybrid sites and decreased expression of associated genes. Accordingly, inhibition of TGFβ mitigated the transcriptional effect of FOXL2. Our results provide mechanistic insight into AGCT pathogenesis, identifying FOXL2 and its interaction with SMAD4 as potential therapeutic targets to this condition. SIGNIFICANCE: FOXL2 hijacks SMAD4 and leads to the expression of genes involved in EMT, stemness, and oncogenesis in AGCT, making FOXL2 and the TGFβ pathway therapeutic targets in this condition. GRAPHICAL ABSTRACT: http://cancerres.aacrjournals.org/content/canres/80/17/3466/F1.large.jpg.