PURPOSE. Bone morphogenetic proteins (BMPs) are secreted signaling molecules that are implicated in the control of multiple events during mouse eye development. However, little is known about the mechanisms by which BMP signaling regulates these retinal developmental processes. METHODS. Real-time PCR, Western blot, and immunohistochemistry were used to investigate the expression of components of BMP signaling in the mouse retina. Retinal progenitor cells (RPCs) were used to study the effects of BMP4 on retinal cell differentiation and regulation of Id protein expression. RESULTS. Results showed that BMP2, -4, and -7; BMP receptor (BMPRIb) mRNAs; and proteins and downstream signaling molecule Smad1/5/8 proteins were all highly expressed in the mouse retina during the embryonic (E13.5-E18.5) and early postnatal (P)1 stage and that the expression was downregulated in the adult. On stimulation with BMP4, cultured mouse RPCs differentiated into neuronal lineage whereas astrocyte cell differentiation was inhibited. BMP4 mainly stimulated production of retinal ganglion cells (RGCs). Results also revealed that BMPs and BMPRIb were co-localized with inhibitors of differentiation (Id) (mainly Id1 and -3) in RGCs in the adult mouse retina. Exposure of RPCs to BMP4 upregulated Id1-3 expression levels, mediated through the phosphorylation of Smad1/5/8 proteins. CONCLUSIONS. These results suggest that Id genes are one of the potential targets of BMP signaling in the differentiation of RPCs.