ABSTRACT: Modification of the transforming growth factor β (TGF-β) signaling components by (de)ubiquitination is emerging as a key regulatory mechanism that controls cell signaling responses in health and disease. Here, we show that the deubiquitinating enzyme UBH-1 in Caenorhabditis elegans and its human homolog, ubiquitin C-terminal hydrolase-L1 (UCH-L1), stimulate DAF-7/TGF-β signaling, suggesting that this mode of regulation of TGF-β signaling is conserved across animal species. The dauer larva-constitutive C. elegans phenotype caused by defective DAF-7/TGF-β signaling was enhanced and suppressed, respectively, by ubh-1 deletion and overexpression in the loss-of-function genetic backgrounds of daf7, daf-1/TGF-βRI, and daf4/R-SMAD, but not of daf-8/R-SMAD. This suggested that UBH-1 may stimulate DAF-7/TGF-β signaling via DAF-8/R-SMAD. Therefore, we investigated the effect of UCH-L1 on TGF-β signaling via its intracellular effectors, i.e. SMAD2 and SMAD3, in mammalian cells. Overexpression of UCH-L1, but not of UCH-L3 (the other human homolog of UBH1) or of the catalytic mutant UCH-L1C90A, enhanced TGF-β/SMAD-induced transcriptional activity, indicating that the deubiquitination activity of UCH-L1 is indispensable for enhancing TGF-β/SMAD signaling. We also found that UCH-L1 interacts, deubiquitinates, and stabilizes SMAD2 and SMAD3. Under hypoxia, UCH-L1 expression increased and TGF-β/SMAD signaling was potentiated in the A549 human lung adenocarcinoma cell line. Notably, UCH-L1-deficient A549 cells were impaired in tumorigenesis, and, unlike WT UCH-L1, a UCH-L1 variant lacking deubiquitinating activity was unable to restore tumorigenesis in these cells. These results indicate that UCH-L1 activity supports DAF-7/TGF-β signaling and suggest that UCH-L1's deubiquitination activity is a potential therapeutic target for managing lung cancer.