The best characterized signaling pathway downstream of transforming growth factor β (TGF-β) is through SMAD2 and SMAD3. However, TGF-β also induces phosphorylation of SMAD1 and SMAD5, but the mechanism of this phosphorylation and its functional relevance is not known. Here, we show that TGF-β-induced SMAD1/5 phosphorylation requires members of two classes of type I receptor, TGFBR1 and ACVR1, and establish a new paradigm for receptor activation where TGFBR1 phosphorylates and activates ACVR1, which phosphorylates SMAD1/5. We demonstrate the biological significance of this pathway by showing that approximately a quarter of the TGF-β-induced transcriptome depends on SMAD1/5 signaling, with major early transcriptional targets being the ID genes. Finally, we show that TGF-β-induced epithelial-to-mesenchymal transition requires signaling via both the SMAD3 and SMAD1/5 pathways, with SMAD1/5 signaling being essential to induce ID1. Therefore, combinatorial signaling via both SMAD pathways is essential for the full TGF-β-induced transcriptional program and physiological responses.