To maintain iron homoeostasis, the iron regulatory hormone hepcidin is tightly controlled by BMP‐Smad signalling pathway, but the physiological role of Smad7 in hepcidin regulation remains elusive. We generated and characterized hepatocyte‐specific Smad7 knockout mice (Smad7
Alb/Alb), which showed decreased serum iron, tissue iron, haemoglobin concentration, up‐regulated hepcidin and increased phosphor‐Smad1/5/8 levels in both isolated primary hepatocytes and liver tissues. Increased levels of hepcidin lead to reduced expression of intestinal ferroportin and mild iron deficiency anaemia. Interestingly, we found no difference in hepcidin expression or phosphor‐Smad1/5/8 levels between iron‐challenged Smad7
Alb/Alb and Smad7
flox/flox, suggesting other factors assume the role of iron‐induced hepcidin regulation in Smad7 deletion. We performed RNA‐seq to identify differentially expressed genes in the liver. Significantly up‐regulated genes were then mapped to pathways, revealing TGF‐β signalling as one of the most relevant pathways, including the up‐regulated genes Smad6, Bambi and Fst (Follistatin). We found that Smad6 and Bambi—but not Follistatin—are controlled by the iron‐BMP–Smad pathway. Overexpressing Smad6, Bambi or Follistatin in cells significantly reduced hepcidin expression. Smad7 functions as a key regulator of iron homoeostasis by negatively controlling hepcidin expression, and Smad6 and Smad7 have non‐redundant roles. Smad6, Bambi and Follistatin serve as additional inhibitors of hepcidin in the liver.