TGFβ and BMP receptor kinases activate Smad transcription factors by C-terminal phosphorylation. We have identified a subsequent agonist-induced phosphorylation that plays a central dual role in Smad transcriptional activation and turnover. As receptor-activated Smads form transcriptional complexes, they are phosphorylated at an interdomain linker region by CDK8 and CDK9, which are components of transcriptional mediator and elongation complexes. These phosphorylations promote Smad transcriptional action, which in the case of Smad1, is mediated by the recruitment of YAP to the phosphorylated linker sites. An effector of the highly conserved Hippo organ size control pathway, YAP supports Smad1-dependent transcription and is required for BMP suppression of neural differentiation of mouse embryonic stem cells. The phosphorylated linker is ultimately recognized by specific ubiquitin ligases, leading to proteasome-mediated turnover of activated Smad proteins. Thus, nuclear CDK8/9 drive a cycle of Smad utilization and disposal that is an integral part of canonical BMP and TGFβ pathways.

Specific chromatin marks keep master regulators of differentiation silent, yet poised for activation by extracellular signals. We report that nodal TGF-β signals use the poised histone mark H3K9me3 to trigger differentiation of mammalian embryonic stem cells. Nodal receptors induce the formation of companion Smad4-Smad2/3 and TRIM33-Smad2/3 complexes. TRIM33-Smad2/3 binds the histone marks H3K9me3 and K18ac on the promoters of mesendoderm regulators Gsc and Mixl1. Binding is through the PHD-Bromo cassette of TRIM33. In the crystal structure of this cassette bound to histone H3 peptides, PHD recognizes K9me3 and Bromo an adjacent K18ac. Binding of TRIM33-Smad2/3 to H3K9me3 displaces the chromatin compacting factor HP1γ and makes nodal response elements accessible to Smad4-Smad2/3 for Pol II recruitment. In turn, Smad4 increases K18 acetylation to augment TRIM33-Smad2/3 binding. Thus, nodal cues use the H3K9me3 mark as a platform to switch master regulators of stem cell differentiation from the poised to the active state.