Bone morphorgenetic protein (BMP)-4 has been shown to play a pivotal role in eye development; however, its role in mature retina or ocular angiogenic diseases is unclear. Activating downstream Smad signaling, BMP4 can be either pro-angiogenic or anti-angiogenic, depending on the context of cell types and associated microenvironment. In this study, we generated transgenic mice over-expressing BMP4 in retinal pigment epithelial (RPE) cells (Vmd2-Bmp4 Tg mice), and used the laser-induced choroidal neovascularization (CNV) model to study the angiogenic properties of BMP4 in adult eyes. Vmd2-Bmp4 Tg mice displayed normal retinal histology at 10 weeks of age when compared with age-matched wildtype mice. Over-expression of BMP4 in RPE in the transgenic mice was confirmed by real-time PCR and immunostaining. Elevated levels of Smad1,5 phosphorylation were found in BMP4 transgenic mice compared to wildype mice. Over-expression of BMP4 was associated with less severe CNV as characterized by fluorescein angiography, CNV volume measurement and histology. While control mice showed increased levels of vascular endothelial growth factor (VEGF) and matrix metalloproteinase (MMP)-9 after laser injury, Vmd2-Bmp4 Tg showed no increase in either VEGF or MMP-9. Further, we found that TNF-induced MMP-9 secretion in vitro was reduced by pretreatment of RPE cells with BMP4. The inhibition of MMP-9 was Smad-dependent because BMP4 failed to repress TNF-induced MMP-9 expression when Smad1,5 was silenced by siRNA. In summary, our studies identified an anti-angiogenic role for BMP4 in laser-induced CNV, mediated by direct inhibition of MMP-9 and indirect inhibition of VEGF.