Signaling through receptors of the transforming growth factor β (TGFβ) superfamily is mediated by cytoplasmic Smad proteins. It has been demonstrated that Smad anchor for receptor activation (SARA) facilitates TGFβ and activin/nodal signaling by recruiting and presenting Smad2/3 to the receptor complex. SARA does not bind Smad1 and hence does not enhance bone morphogenetic protein (BMP) signaling. Here we report for the first time that the endosome-associated FYVE-domain protein endofin acts as a Smad anchor for receptor activation in BMP signaling. We demonstrate that endofin binds Smad1 preferentially and enhances Smad1 phosphorylation and nuclear localization upon BMP stimulation. Silencing of endofin by RNAi resulted in a reduction in BMP-dependent Smad1 phosphorylation. Moreover, disruption of the membrane-anchoring FYVE motif by point mutation led to a reduction of BMP-responsive gene expression in cell culture and Xenopus ectodermal explants. Furthermore, we demonstrate that endofin contains a protein-phosphatase-binding motif, which functions to negatively modulate BMP signals through receptor dephosphorylation. Taken together, our results suggest that endofin plays an important role in both positive and negative feedback regulation of the BMP signaling pathway.