Integration of diverse signaling pathways is essential in development and homeostasis for cells to interpret context-dependent cues. BMP and MAPK signaling converge on Smads, resulting in differential phosphorylation. To understand the physiological significance of this observation, we have generated Smad1 mutant mice carrying mutations that prevent phosphorylation of either the C-terminal motif required for BMP downstream transcriptional activation (Smad1(C) mutation) or of the MAPK motifs in the linker region (Smad1(L) mutation). Smad1(C/C) mutants recapitulate many Smad1(-/-) phenotypes, including defective allantois formation and the lack of primordial germ cells (PGC), but also show phenotypes that are both more severe (head and branchial arches) and less severe (allantois growth) than the null. Smad1(L/L) mutants survive embryogenesis but exhibit defects in gastric epithelial homeostasis correlated with changes in cell contacts, actin cytoskeleton remodeling, and nuclear beta-catenin accumulation. In addition, formation of PGCs is impaired in Smad1(L/L) mutants, but restored by allelic complementation in Smad1(C/L) compound mutants. These results underscore the need to tightly balance BMP and MAPK signaling pathways through Smad1.