Smad7 is an inhibitory Smad that acts as a negative regulator of signaling by the transforming growth factor-beta (TGF-beta) superfamily proteins. Smad7 is induced by TGF-beta, stably interacts with activated TGF-beta type I receptor (TbetaR-I), and interferes with the phosphorylation of receptor-regulated Smads. Here we show that Smurf1, an E3 ubiquitin ligase for bone morphogenetic protein-specific Smads, also interacts with Smad7 and induces Smad7 ubiquitination and translocation into the cytoplasm. In addition, Smurf1 associates with TbetaR-I via Smad7, with subsequent enhancement of turnover of TbetaR-I and Smad7. These results thus reveal a novel function of Smad7, i.e. induction of degradation of TbetaR-I through recruitment of an E3 ligase to the receptor.