The transitional epithelium of the bladder normally turns over slowly but upon injury undergoes rapid regeneration fueled by basal uroepithelial stem and/or early progenitor cells (USCs). Little is known about the mechanisms underlying the injury response. We investigate the mechanism of bladder epithelial regeneration in response to infection with uropathogenic E. coli (UPEC). Infection resulted in rapid sloughing of superficial cells, a marked inflammatory response, and a substantial spike in basal cell proliferation. In mice with induced urothelial ablation of a member of the TGF-beta receptor superfamily, bone morphogenetic protein (Bmp)-4 receptor, infection led to aberrant urothelial renewal resulting from a block in USC differentiation into superficial cells. Chemical injury also caused sloughing but no inflammation or USC activation. Together, our study indicates that UPEC infection but not chemical injury activates the USC niche, and Bmp signaling is required for regulation of the USC response to infection.