Cardio-facio-cutaneous (CFC) syndrome is a developmental disorder caused by constitutively active ERK signaling manifesting mainly from BRAF mutations. Little is known about the role of elevated ERK signaling in CFC syndrome during early development. Here, we show that both SMAD1 and ERK signaling pathways may contribute to the developmental defects in CFC syndrome. Induced pluripotent stem cells (iPSCs) derived from dermal fibroblasts of a CFC syndrome patient (CFC-iPSCs) revealed early developmental defects in embryoid body (EB) development, beta-catenin localization, and neuronal differentiation. Both SMAD1 and ERK signalings were significantly activated in CFC-iPSCs during EB formation. Most of the beta-catenin was dissociated from the membrane and preferentially localized into the nucleus in CFC-EBs. Furthermore, activation of SMAD1 signaling recapitulated early developmental defects in wildtype iPSCs. Intriguingly, inhibition of SMAD1 signaling in CFC-iPSCs rescued aberrant EB morphology, impaired neuronal differentiation, and altered beta-catenin localization. These results suggest that SMAD1 signaling may be a key pathway contributing the pathogenesis of CFC syndrome during early development.