The transforming growth factor β (TGFβ) superfamily of signaling pathways, including the bone morphogenetic protein (BMP) subfamily of ligands and receptors, controls a myriad of developmental processes across metazoan biology. Transport of the receptors from the plasma membrane to endosomes has been proposed to promote TGFβ signal transduction and shape BMP-signaling gradients throughout development. However, how postendocytic trafficking of BMP receptors contributes to the regulation of signal transduction has remained enigmatic. Here we report that the intracellular domain of Caenorhabditis elegans BMP type I receptor SMA-6 (small-6) binds to the retromer complex, and in retromer mutants, SMA-6 is degraded because of its missorting to lysosomes. Surprisingly, we find that the type II BMP receptor, DAF-4 (dauer formation-defective-4), is retromer-independent and recycles via a distinct pathway mediated by ARF-6 (ADP-ribosylation factor-6). Importantly, we find that loss of retromer blocks BMP signaling in multiple tissues. Taken together, our results indicate a mechanism that separates the type I and type II receptors during receptor recycling, potentially terminating signaling while preserving both receptors for further rounds of activation.