By inducing epithelial-to-mesenchymal transition (EMT), transforming growth factor-beta (TGF-beta) promotes cancer progression and fibrosis. Here we show that expression of the TGF-beta receptor-associated protein, SARA (Smad anchor for receptor activation), decreases within 72 h of exposure to TGF-beta and that this decline is both required and sufficient for the induction of several markers of EMT. It has been suggested recently that expression of the TGF-beta signaling mediators, Smad2 and Smad3, may have different functional effects, with Smad2 loss being more permissive for EMT progression. We find that the loss of SARA expression leads to a concomitant decrease in Smad2 expression and a disruption of Smad2-specific transcriptional activity, with no effect on Smad3 signaling or expression. Further, the effects of inducing the loss of Smad2 mimic those of the loss of SARA, enhancing expression of the EMT marker, smooth muscle alpha-actin. Smad2 mRNA levels are not affected by the loss of SARA. However, the ubiquitination of Smad2 is increased in SARA-deficient cells. We therefore examined the E3 ubiquitin ligase Smurf2 and found that although Smurf2 expression was unaltered in SARA-deficient cells, the interaction of Smad2 and Smurf2 was enhanced. These results describe a significant role for SARA in regulating cell phenotype and suggest that its effects are mediated through modification of the balance between Smad2 and Smad3 signaling. In part, this is achieved by enhancing the association of Smad2 with Smurf2, leading to Smad2 degradation.