The conjugation of ubiquitin to proteins involves a cascade of activating (E1), conjugating (E2), and ubiquitin-ligating (E3) type enzymes that commonly signal protein destruction. In TGFbeta signaling the inhibitory protein Smad7 recruits Smurf2, an E3 of the C2-WW-HECT domain class, to the TGFbeta receptor complex to facilitate receptor degradation. Here, we demonstrate that the amino-terminal domain (NTD) of Smad7 stimulates Smurf activity by recruiting the E2, UbcH7, to the HECT domain. A 2.1 A resolution X-ray crystal structure of the Smurf2 HECT domain reveals that it has a suboptimal E2 binding pocket that could be optimized by mutagenesis to generate a HECT domain that functions independently of Smad7 and potently inhibits TGFbeta signaling. Thus, E2 enzyme recognition by an E3 HECT enzyme is not constitutively competent and provides a point of control for regulating the ubiquitin ligase activity through the action of auxiliary proteins.