Haematopoietic stem cells (HSCs) are a subset of bone marrow cells that are capable of self-renewal and of forming all types of blood cells (multi-potential). However, the HSC 'niche'--the in vivo regulatory microenvironment where HSCs reside--and the mechanisms involved in controlling the number of adult HSCs remain largely unknown. The bone morphogenetic protein (BMP) signal has an essential role in inducing haematopoietic tissue during embryogenesis. We investigated the roles of the BMP signalling pathway in regulating adult HSC development in vivo by analysing mutant mice with conditional inactivation of BMP receptor type IA (BMPRIA). Here we show that an increase in the number of spindle-shaped N-cadherin+CD45- osteoblastic (SNO) cells correlates with an increase in the number of HSCs. The long-term HSCs are found attached to SNO cells. Two adherens junction molecules, N-cadherin and beta-catenin, are asymmetrically localized between the SNO cells and the long-term HSCs. We conclude that SNO cells lining the bone surface function as a key component of the niche to support HSCs, and that BMP signalling through BMPRIA controls the number of HSCs by regulating niche size.