Sensory axon development requires concerted actions of growth factors for the precise control of axonal outgrowth and target innervation. How developing sensory neurons integrate different cues is poorly understood. We demonstrate here that Smad1 activation is required for neurotrophin-mediated sensory axon growth invitro and invivo. Through differential phosphorylation, Smad1 exerts transcriptional selectivity to regulate the expression and activity of Erk1 and Erk2-two key neurotrophin effectors. Specifically, bone morphogenetic proteins (BMPs) signal through carboxy-terminal phosphorylation of Smad1 (pSmad1C) to induce Erk1/2 transcription for enhanced neurotrophin responsiveness. Meanwhile, neurotrophin signaling results in linker phosphorylation of Smad1 (pSmad1L), which in turn upregulates an Erk-specific dual-specificity phosphatase, Dusp6, leading to reduced pErk1/2 and constituting a negative-feedback loop for the prevention of axon overgrowth. Together, the BMP and neurotrophin pathways form a tightly regulated signaling network with a balanced ratio of Erk1/2 and pErk1/2 to direct the precise connections between sensory neurons and peripheral targets.