Genomic instability is one of the representative causes in genetic disorder, where the proper cellular response to DNA damage is essential in maintaining genomic stability. ATM and the Mre11-Rad50-Nbs1 (MRN) complex play critical roles in the cellular response to DNA damage such as DNA double-strand break (DSB). In this study, we report that Smad7 is indispensible in DNA damage response as a novel component of MRN complex. Smad7 enhances cell survival against DNA damage by accelerating ATM dependent DNA repair signaling. In Smad7-deficient mouse embryonic fibroblast cells, the loss of Smad7 decreases ATM activation and inhibits recruitment of ATM to the sites of DSBs. Smad7 interacts with Nbs1, a member of MRN complex, and enhances the interaction between ATM and Nbs1 upon DNA damage response, leading to phosphorylation of downstream substrates. Ectopic expression of Smad7 in the skin of mice enhances the phosphorylation of ATM upon X-irradiation. We found that effect of Smad7 on enhancing DNA repair is independent of its inhibitory activity of TGF-β signaling. Taken together, our results highlight a critical function of Smad7 in DSB response and establish the novel mechanism in which Smad7 facilitates the recruitment of ATM to the MRN complex through direct interaction with Nbs1.