The signaling molecules bone morphogenic protein (BMP) 4 and 2 have been implicated in early organogenesis and cell differentiation of the pituitary. However, the use of different experimental paradigms has led to conflicting interpretations with regard to the action of these factors on differentiation of corticotroph cells and on expression of the proopiomelanocortin (POMC) gene. We have now directly assessed the action of BMP signaling on POMC expression and found that BMP4 represses POMC mRNA levels and promoter activity. This repression appears to be dependent on the classical BMP signaling pathway that involves the activin-like kinase 3/6 receptors and the Smad1/4 transcription factors. The repression is reversed by overexpression of the inhibitory Smads, Smad6 or Smad7. Collectively, the evidence suggests that autocrine BMP signaling may be acting upon AtT-20 cells to set the level of POMC expression. Upon BMP4 stimulation, activated phospho-Smad1 is recruited to the POMC promoter, where it apparently acts through interactions with the Pitx and Tpit transcription factors. It is postulated that these interactions interfere with the transcriptional activity of Pitx and/or Tpit, thus resulting in transcriptional repression.