Bone morphogenetic protein (BMP) signaling is a key pathway in the patterning and development of organisms as diverse as fruit fly and humans. However, the determination of net BMP signaling, paramount to understanding organogenesis, is limited to the analysis of fixed material. We generated a transgenic mouse that reports the transcriptional response of BMP Smad activation by coupling a well established BMP response element (BRE), isolated from the Id1 promoter, to green fluorescent protein (BRE:gfp). We monitored BMP Smad transcriptional activity in fresh and fixed BRE:gfp embryos. GFP expression was observed where expected on the basis of known signaling sites, but also in specific cell populations in which BMP signaling had been implicated but not directly demonstrated. Deletion of Smad5 reduced GFP in vivo as expected. The BRE:gfp transgenic mice are a novel tool, which will facilitate the identification of specific BMP Smad responsive cell types and allow BMP Smad signaling to be monitored in real time, supporting studies in development and disease.