The interplay between sequence-specific DNA-binding transcription factors, histone-modifying enzymes, and chromatin-remodeling enzymes underpins transcriptional regulation. Although it is known how single domains of chromatin "readers" bind specific histone modifications, how combinations of histone marks are recognized and decoded is poorly understood. Moreover, the role of histone binding in regulating the enzymatic activity of chromatin readers is not known. Here we focus on the TGF-β superfamily transcriptional repressor TIF1γ/TRIM33/Ectodermin and demonstrate that its PHD finger-bromodomain constitutes a multivalent histone-binding module that specifically binds histone H3 tails unmethylated at K4 and R2 and acetylated at two key lysines. TIF1γ's ability to ubiquitinate its substrate Smad4 requires its PHD finger-bromodomain, as does its transcriptional repressor activity. Most importantly, TIF1γ's E3 ubiquitin ligase activity is induced by histone binding. We propose a model of TIF1γ activity in which it dictates the residence time of activated Smad complexes at promoters of TGF-β superfamily target genes.