MAD plays an important role in decapentaplegic (DPP) signaling throughout Drosophila development. Despite a recent study describing the restriction of DPP signaling via putative ubiquitin E3 ligase dSmurf (1), the molecular mechanisms of how dSmurf affects DPP signaling remain unexplored. Toward this goal we demonstrated the degradation of phosphorylated MAD by dSmurf. dSmurf selectively interacted with MAD, but not Medea and Dad, and the MAD-dSmurf interaction was induced by constitutively active DPP type I receptor thickveins. Wild type dSmurf, but not its C1029A mutant, mediated ubiquitination-dependent degradation of MAD. Silencing of dSmurf using RNA interference stabilized MAD protein in Drosophila S2 cells. Targeted expression of dSmurf in various tissues abolished phosphorylated MAD and disrupted patterning and growth. In contrast, similar overexpression of inactive dSmurf(C1029A) showed no significant effects on development. We conclude that dSmurf specifically targets phosphorylated MAD to proteasome-dependent degradation and regulates DPP signaling during development.