Transforming growth factor beta (TGFbeta) regulates multiple cellular processes via activation of Smad signaling pathways. We have recently demonstrated that the inhibitory Smad7 interacts with the acetyl transferase p300 and that p300 acetylates Smad7 on two lysine residues. These lysine residues are critical for Smurf-mediated ubiquitination of Smad7, and acetylation protects Smad7 from TGFbeta-induced degradation. In this study we demonstrate that Smad7 interacts with specific histone deacetylases (HDACs) and that the same HDACs are able to deacetylate Smad7. The interaction with HDACs is dependent on the C-terminal MH2 domain of Smad7. In addition, HDAC1-mediated deacetylation of Smad7 decreases the stability of Smad7 by enhancing its ubiquitination. Thus, our results demonstrate that the degradation of Smad7 is regulated by the balance between acetylation, deacetylation and ubiquitination, indicating that this could be a general mechanism to regulate the stability of cellular proteins.