A cell's decision to growth arrest, apoptose, or differentiate in response to transforming growth factor beta (TGF-beta) superfamily ligands depends on the ligand concentration. How cells sense the concentration of extracellular bioavailable TGF-beta remains poorly understood. We therefore undertook a systematic quantitative analysis of how TGF-beta ligand concentration is transduced into downstream phospho-Smad2 kinetics, and we found that the rate of TGF-beta ligand depletion is the principal determinant of Smad signal duration. TGF-beta depletion is caused by two mechanisms: (i) cellular uptake of TGF-beta by a TGF-beta type II receptor-dependent mechanism and (ii) reversible binding of TGF-beta to the cell surface. Our results indicate that cells sense TGF-beta dose by depleting TGF-beta via constitutive TGF-beta type II receptor trafficking processes. Our results also have implications for the role of the TGF-beta type II receptor in disease, as tumor cells harboring TGF-beta type II receptor mutations exhibit impaired TGF-beta depletion, which may contribute to the overproduction of TGF-beta and a consequently poor prognosis in cancer.