TGF-beta members are of key importance during embryogenesis and tissue homeostasis. Smad7 is a potent antagonist of TGF-beta family/Smad-mediated responses, but the regulation of Smad7 activity is not well understood. We identified the RING domain-containing E3 ligase RNF12 as a critical component of TGF-beta signaling. Depletion of RNF12 dramatically reduced TGF-beta/Smad-induced effects in mammalian cells, whereas ectopic expression of RNF12 strongly enhanced these responses. RNF12 specifically binds to Smad7 and induces its polyubiquitination and degradation. Smad7 levels were increased in RNF12-deficient mouse embryonic stem cells, resulting in mitigation of both BMP-mediated repression of neural induction and activin-induced anterior mesoderm formation. RNF12 also antagonized Smad7 during Nodal-dependent and BMP-dependent signaling and morphogenic events in early zebrafish embryos. The gastrulation defects induced by ectopic and depleted Smad7 were rescued in part by RNF12 gain and loss of function, respectively. These findings demonstrate that RNF12 plays a critical role in TGF-beta family signaling.