We show that 1 of the type II bone morphogenetic protein (BMP) receptor ligands, BMP4, is widely expressed in the adult mouse lung and is upregulated in hypoxia-induced pulmonary hypertension (PH). Furthermore, heterozygous null Bmp4^lacZ/+ mice are protected from the development of hypoxia-induced PH, vascular smooth muscle cell proliferation, and vascular remodeling. This is associated with a reduction in hypoxia-induced Smad1/5/8 phosphorylation and Id1 expression in the pulmonary vasculature. In addition, pulmonary microvascular endothelial cells secrete BMP4 in response to hypoxia and promote proliferation and migration of vascular smooth muscle cells in a BMP4-dependent fashion. These findings indicate that BMP4 plays a dominant role in regulating BMP signaling in the hypoxic pulmonary vasculature and suggest that endothelium-derived BMP4 plays a direct, paracrine role in promoting smooth muscle proliferation and remodeling in hypoxic PH.