Bone morphogenetic protein (Bmp) signaling is critical for the development and patterning of the mouse pituitary from the initial induction of Rathke's pouch to cell specification in the anterior lobe. We examined the regulation of Bmp signaling during pituitary development by analyzing null embryos for noggin, a Bmp 2 and 4 antagonist. Noggin is expressed in the ventral diencephalon during Rathke's pouch induction, in the underlying cartilage plate during cell specification and in the adult anterior pituitary gland. Noggin null embryos have a variable pituitary phenotype, which ranges from a rostrally displaced Rathke's pouch to induction of secondary pituitary tissue. While cell specification in the anterior pituitary appears normal, patterning in the ventral diencephalon is disrupted; Bmp4 activity is expanded resulting in Fibroblast growth factor 10 repression and in a rostral shift in the boundary between the Bmp4 and Sonic hedgehog expression domains. The expanded domain of Bmp4 activity also results in additional invaginations of oral ectoderm and can shift the position of Rathke's pouch or create secondary pituitary tissue. This work demonstrates the importance of attenuating the activity of Bmp signaling during pituitary induction in order to maintain the proper balance of signaling factors necessary for pituitary organogenesis.