Embodiments of the present invention disclose a data transmission method, a mobility management entity, and a mobile terminal. The method includes: receiving, by a mobility management entity, a small data transmission parameter that is sent by a home subscriber server HSS or a user equipment, where the small data transmission parameter includes an indication of whether the user equipment supports small data transmission; determining, by the mobility management entity, a small data transmission policy according to the small data transmission parameter; sending, by the mobility management entity, the determined small data transmission policy to the user equipment; and performing, by the mobility management entity, the small data transmission with the user equipment according to the small data transmission policy. The present invention proposes a relatively complete small data transmission solution, thereby implementing effective transmission of small data.