Bone morphogenetic proteins (BMPs) signal through the BMP type I and type II receptors to regulate cellular processes, including embryonic development. The type I BMP receptors activin-like kinase (ALK)3 and ALK6 share a high degree of homology, yet possess distinct signaling roles. Here, we report that although the transforming growth factor (TGF)-β type III receptor (TβRIII) enhanced both ALK3 and ALK6 signaling, TβRIII more potently enhanced ALK6-mediated stimulation of the BMP-responsive promoters XVent2 and 3GC2, and up-regulation of the early response gene Smad6. In contrast, TβRIII specifically enhanced ALK3-mediated up-regulation of the early response gene ID-1. TβRIII associated with ALK3 primarily through their extracellular domains, whereas its interaction with ALK6 required both the extracellular and cytoplasmic domains. TβRIII, along with its interacting scaffolding protein β-arrestin2, induced the internalization of ALK6. In contrast, TβRIII colocalized with and resulted in the cell surface retention of ALK3, independently of β-arrestin2. Although complex formation between TβRIII, ALK6, and β-arrestin2 and TβRIII/ALK6 internalization resulted in maximal BMP signaling, the TβRIII mutant unable to interact with β-arrestin2, TβRIII-T841A, was unable to do so. These studies support a novel role for TβRIII in mediating differential ALK3 and ALK6 subcellular trafficking resulting in distinct signaling downstream of ALK3 and ALK6.