The receptor-regulated Smad proteins are essential intracellular mediators of signal transduction by the transforming growth factor-beta (TGF-beta) superfamily of growth factors and are also important as regulators of gene transcription. Here we describe a new role for TGF-beta-regulated Smad2 and Smad3 as components of a ubiquitin ligase complex. We show that in the presence of TGF-beta signalling, Smad2 interacts through its proline-rich PPXY motif with the tryptophan-rich WW domains of Smurf2, a recently identified E3 ubiquitin ligases. TGF-beta also induces the association of Smurf2 with the transcriptional co-repressor SnoN and we show that Smad2 can function to mediate this interaction. This allows Smurf2 HECT domain to target SnoN for ubiquitin-mediated degradation by the proteasome. Thus, stimulation by TGF-beta can induce the assembly of a Smad2-Smurf2 ubiquitin ligase complex that functions to target substrates for degradation.