TGF-β induces phosphorylation of the transcription factors Smad2 and Smad3 at the C terminus as well as at an interdomain linker region. TGF-β-induced linker phosphorylation marks the activated Smad proteins for proteasome-mediated destruction. Here, we identify Nedd4L as the ubiquitin ligase responsible for this step. Through its WW domain, Nedd4L specifically recognizes a TGF-β-induced phosphoThr-ProTyr motif in the linker region, resulting in Smad2/3 polyubiquitination and degradation. Nedd4L is not interchangeable with Smurf1, a ubiquitin ligase that targets BMP-activated, linker-phosphorylated Smad1. Nedd4L limits the half-life of TGF-β-activated Smads and restricts the amplitude and duration of TGF-β gene responses, and in mouse embryonic stem cells, it limits the induction of mesoendodermal fates by Smad2/3-activating factors. Hierarchical regulation is provided by SGK1, which phosphorylates Nedd4L to prevent binding of Smad2/3. Previously identified as a regulator of renal sodium channels, Nedd4L is shown here to play a broader role as a general modulator of Smad turnover during TGF-β signal transduction.