Smad4 is a key signal transducer of the transforming growth factor-β (TGF-β) superfamily of growth factors that are critical regulators of embryonic patterning and adult tissue homeostasis. The biological activity of the TGF-β signaling is tightly controlled at multiple levels, including the abundance of SMAD4 proteins. We previously recovered a novel allele of Smad4 in a gene-based screen in N-ethyl-N-nitrosourea (ENU)-mutagenized mouse embryonic stem cells. The mutation resulted in an unstable truncated protein that is degraded through proteasomal pathways. In the heterozygous state, this allele acts in a dominant negative fashion to reduce the wild-type protein level as well as signaling output. Biochemical characterization indicated that the truncated protein is able to form a complex with the wild-type protein, thus targeting it for proteasomal degradation as well. Phenotypic analyses of the heterozygous animals provided insight into the threshold requirement of Smad4-dependent signaling in vivo.