Transforming growth factor beta (TGFbeta)-inducible early gene-1 (TIEG1) is a Krüppel-like transcription factor that is rapidly induced upon TGFbeta treatment. TIEG1 promotes TGFbeta/Smad signaling by down-regulating negative feedback through the inhibitory Smad7. In this report, we describe the identification of an E3 ubiquitin ligase, Seven in Absentia homologue-1 (SIAH1), as a TIEG1-interacting protein. We show that TIEG1 and SIAH1 interact through an amino-terminal domain of TIEG1. Co-expression of SIAH1 results in proteasomal degradation of TIEG1 but not of the related factor TIEG2. Importantly, co-expression of SIAH1 completely reverses repression of Smad7 promoter activity by TIEG1. Furthermore, overexpression of a dominant negative SIAH1 stabilizes TIEG1 and synergizes with TIEG1 to enhance TGFbeta/Smad-dependent transcriptional activation. These findings suggest a novel mechanism whereby the ability of TGFbeta to modulate gene transcription may be regulated by proteasomal degradation of the downstream effector TIEG1 through the SIAH pathway. In this manner, turnover of TIEG1 may serve to limit the duration and/or magnitude of TGFbeta responses.