Smad proteins regulate gene expression in response to TGFbeta signaling. Here we present evidence that Smad7 interacts with the transcriptional coactivator p300, resulting in acetylation of Smad7 on two lysine residues in its N terminus. Acetylation or mutation of these lysine residues stabilizes Smad7 and protects it from TGFbeta-induced degradation. Furthermore, we demonstrate that the acetylated residues in Smad7 also are targeted by ubiquitination and that acetylation of these lysine residues prevents subsequent ubiquitination. Specifically, acetylation of Smad7 protects it against ubiquitination and degradation mediated by the ubiquitin ligase Smurf1. Thus, our data suggest that competition between ubiquitination and acetylation of overlapping lysine residues constitutes a novel mechanism to regulate protein stability.