Tubular damage and interstitial fibrosis is a final common pathway leading to end-stage renal disease, and once tubular damage is established, it cannot be reversed by currently available treatment. The administration of bone morphogenetic protein-7 (BMP-7) in pharmacological doses repairs established tubular damages and improves renal function in several kidney disease models; however, pathophysiological role of endogenous BMP-7 and regulatory mechanism of its activities remain elusive. The activity of BMP is precisely regulated by certain classes of molecules termed BMP agonist/antagonist. In this review, roles of BMP agonist/antagonists possibly modulating the activity of BMP in kidney diseases are discussed. Our group demonstrated that uterine sensitization-associated gene-1 (USAG-1), a novel BMP antagonist abundantly expressed in the kidney, is the central negative regulator of BMP-7 in the kidney, and that mice lacking USAG-1 (USAG-1(-/-) mice) are resistant to kidney injuries. USAG-1(-/-) mice exhibited markedly prolonged survival and preserved renal function in acute and chronic renal injuries. Renal BMP signaling, assessed by phosphorylation of Smad proteins, is significantly enhanced in USAG-1(-/-) mice during renal injury, indicating that the preservation of renal function is attributed to enhancement of endogenous BMP-7 signaling. Furthermore, the administration of neutralizing antibody against BMP-7 abolished renoprotection in USAG-1(-/-) mice, indicating that USAG-1 plays a critical role in the modulation of renoprotective action of BMP, and that inhibition of USAG-1 will be promising means of development of novel treatment for kidney diseases.