Bone morphogenetic proteins (BMPs) orchestrate key cellular events, such as proliferation and differentiation, in development and homeostasis. Extracellular antagonists, such as chordin, are essential regulators of BMP signaling. Chordin binds to BMPs blocking interaction with receptors, and cleavage by tolloid proteinases is thought to relieve this inhibition. A model has been previously proposed where chordin adopts a horseshoe-like arrangement enabling BMP binding cooperatively by terminal domains (1). Here, we present the nanoscale structure of human chordin using electron microscopy, small angle X-ray scattering, and solution-based biophysical techniques, which together show that chordin indeed has a compact horseshoe-shaped structure. Chordin variants were used to map domain locations within the chordin molecule. The terminal BMP-binding domains protrude as prongs from the main body of the chordin structure, where they are well positioned to interact with the growth factor. The spacing provided by the chordin domains supports the principle of a cooperative BMP-binding arrangement that the original model implied in which growth factors bind to both an N- and C-terminal von Willebrand factor C domain of chordin. Using binding and bioactivity assays, we compared full-length chordin with two truncated chordin variants, such as those produced by partial tolloid cleavage. Cleavage of either terminal domain has little effect on the affinity of chordin for BMP-4 and BMP-7 but C-terminal cleavage increases the efficacy of chordin as a BMP-4 inhibitor. Together these data suggest that partial tolloid cleavage is insufficient to ablate BMP inhibition and the C-terminal chordin domains play an important role in BMP regulation.