The insulin/IGF-1 signaling (IIS) pathway is a conserved regulator of longevity, development, and metabolism. In Caenorhabditis elegans IIS involves activation of DAF-2 (insulin/IGF-1 receptor tyrosine kinase), AGE-1 (PI 3-kinase), and additional downstream serine/threonine kinases that ultimately phosphorylate and negatively regulate the single FOXO transcription factor homolog DAF-16. Phosphatases help to maintain cellular signaling homeostasis by counterbalancing kinase activity. However, few phosphatases have been identified that negatively regulate the IIS pathway. Here we identify and characterize pdp-1 as a novel negative modulator of the IIS pathway. We show that PDP-1 regulates multiple outputs of IIS such as longevity, fat storage, and dauer diapause. In addition, PDP-1 promotes DAF-16 nuclear localization and transcriptional activity. Interestingly, genetic epistasis analyses place PDP-1 in the DAF-7/TGF-β signaling pathway, at the level of the R-SMAD proteins DAF-14 and DAF-8. Further investigation into how a component of TGF-β signaling affects multiple outputs of IIS/DAF-16, revealed extensive crosstalk between these two well-conserved signaling pathways. We find that PDP-1 modulates the expression of several insulin genes that are likely to feed into the IIS pathway to regulate DAF-16 activity. Importantly, dysregulation of IIS and TGF-β signaling has been implicated in diseases such as Type 2 Diabetes, obesity, and cancer. Our results may provide a new perspective in understanding of the regulation of these pathways under normal conditions and in the context of disease.