We performed an in depth analysis of Bmp4, a critical regulator of development, disease, and evolution, in cranial neural crest (CNC). Conditional Bmp4 overexpression, using a tetracycline-regulated Bmp4 gain-of-function allele, resulted in facial skeletal changes that were most dramatic after an E10.5 Bmp4 induction. Expression profiling uncovered a signature of Bmp4-induced genes (BIG) composed predominantly of transcriptional regulators that control self-renewal, osteoblast differentiation and negative Bmp autoregulation. The complimentary experiment, CNC inactivation of Bmp2, Bmp4 and Bmp7, resulted in complete or partial loss of multiple CNC-derived skeletal elements, revealing a crucial requirement for Bmp signaling in membranous bone and cartilage development. Importantly, the BIG signature was reduced in Bmp loss-of-function mutants, indicating Bmp-regulated target genes are modulated by Bmp dose. Chromatin immunoprecipitation (ChIP) revealed a subset of the BIG signature, including Satb2, Smad6, Hand1, Gadd45γ and Gata3, that was bound by Smad1/5 in the developing mandible, revealing direct Smad-mediated regulation. These data support the hypothesis that Bmp signaling regulates craniofacial skeletal development by balancing self-renewal and differentiation pathways in CNC progenitors.