The apical ectodermal ridge (AER), a transient specialized epithelium at the distal limb tip, is essential for vertebrate embryonic limb outgrowth along the proximodistal axis. Among all the molecules expressed in the AER, only the Fibroblast Growth Factors (FGFs) have been shown to substitute for its function in limb outgrowth. After specification of the skeletal progenitors is complete, the AER regresses, having fulfilled its function. However, the cellular processes underlying AER regression remain largely unclear, and the molecular ones, totally unknown. Members of the Bone Morphogenetic Protein (BMP) family are expressed in the AER throughout its life and in the mesenchyme. Our studies using misexpression of Noggin, a BMP inhibitor, reveal an unsuspected role for BMPs in the negative regulation of Fgf expression and AER function. We find that BMPs limit limb outgrowth by promoting AER regression, as BMP inhibition results in persistence of the AER, prolonged Fgf expression and excess soft-tissue growth. In addition, the Noggin misexpression studies uncover an earlier role for BMPs in repression of AER function. Noggin overexpression results in extension of the AER anteriorly and loss of AER asymmetry. We show that overall the AER becomes taller, and its anterior half becomes more similar to a normal posterior AER. In addition, Fgf4 transcripts, which are usually restricted to the posterior half of the AER, are now also expressed anteriorly. Moreover, ectopicFgf4 expression is induced independently of Sonic Hedgehog, contrary to current models of Fgf4 regulation in the limb. Our studies also provide insight into the activity of the hypothesized apical ectodermal maintenance factor (AEMF), which is thought to maintain the tall shape of the posterior part of the AER. Our work shows that the AER is negatively regulated by BMP.