We have examined the sub-type specific functions within the MH2 domain of the SMAD-family of transcription factors and found that our novel algorithm, called “Sequence Harmony”, has a high specificity for identification of sites important for the functional differences. For the SMAD MH2 domain, 40 sub-type specific functional sites are predicted, which in the structure form clusters of similar function, i.e. for receptor binding, co-repressor binding and binding to transcription factors. From these clusters, putative functions were assigned to eleven out of fourteen predicted functional sites with unknown function. We propose these fourteen sites of unknown function as interesting candidates for further (experimental) investigation.