Smad ubiquitin regulatory factor 1 (SMURF1) is a HECT-type E3 ubiquitin ligase that plays a critical role in vertebrate development by regulating planar cell polarity (PCP) signaling and convergent extension (CE). Here we show that SMURF1 is involved in mammalian heart development. We find that SMURF1 is highly expressed in outflow tract cushion mesenchyme and Smurf1-/- mouse embryos show delayed outflow tract septation. SMURF1 is expressed in smooth muscle cells of the coronary arteries and great vessels. Thickness of the aortic smooth muscle cell layer is reduced in Smurf1-/- mouse embryos. We show that SMURF1 is a negative regulator of cardiomyogenesis and a positive regulator of smooth muscle cell and cardiac fibroblast differentiation, indicating that SMURF1 is important for cell-type specification during heart development. Finally, we provide evidence that SMURF1 localizes at the primary cilium where it may regulate bone morphogenetic protein (BMP) signaling, which controls the initial phase of cardiomyocyte differentiation. In summary, our results demonstrate that SMURF1 is a critical regulator of outflow tract septation and cell-type specification during heart development, and that these effects may in part be mediated via control of cilium-associated BMP signaling.