Bone morphogenetic proteins (BMPs), a subgroup of the transforming growth factor (TGF)-β family, transduce their signal through multiple components downstream of their receptors. Even though the components involved in the BMP signaling pathway have been intensely studied, many molecules mediating BMP signaling remain to be addressed. To identify novel components that participate in BMP signaling, RNA interference (RNAi)-based screening was established by detecting phosphorylated Mad (pMad) in Drosophila S2 cells. Ter94, a member of the family of AAA ATPases, was identified as a novel mediator of BMP signaling, which is required for the phosphorylation of Mad in Drosophila S2 cells. Moreover, the mammalian orthlog of Ter94 valosin-containing protein (VCP) plays a critical role in the BMP-Smad1/5/8 signaling pathway in mammalian cells. Genetic evidence suggests that Ter94 is involved in the dorsal-ventral patterning of the Drosophila early embryo through regulating decapentaplegic (Dpp)/BMP signals. Taken together, our data suggest that Ter94/VCP appears to be an evolutionarily conserved component that regulates BMP-Smad1/5/8 signaling.