Precise control of stem cell (SC) proliferation ensures tissue homeostasis. In the Drosophila intestine, injury-induced regeneration involves initial activation of intestinal SC (ISC) proliferation and subsequent return to quiescence. These two phases of the regenerative response are controlled by differential availability of the BMP type I receptor Thickveins (Tkv), yet how its expression is dynamically regulated remains unclear. Here we show that during homeostasis, the E3 ubiquitin ligase Highwire and the ubiquitin-proteasome system maintain low Tkv protein expression. After ISC activation, Tkv is stabilized by proteasome inhibition and undergoes endocytosis due to the induction of the nucleoside diphosphate kinase Abnormal Wing Disc (AWD). Tkv internalization is required for the activation of the Smad protein Mad, and for the return to quiescence after a regenerative episode. Our data provide insight into the mechanisms ensuring tissue homeostasis by dynamic control of somatic stem cell activity.