The process of implantation, necessary for all viviparous birth, consists of tightly regulated events, including apposition of the blastocyst, attachment to the uterine lumen, and differentiation of the uterine stroma. In rodents and primates the uterine stroma undergoes a process called decidualization. Decidualization, the process by which the uterine endometrial stroma proliferates and differentiates into large epithelioid decidual cells, is critical to the establishment of fetal-maternal communication and the progression of implantation. The role of bone morphogenetic protein 2 (Bmp2) in regulating the transformation of the uterine stroma during embryo implantation in the mouse was investigated by the conditional ablation of Bmp2 in the uterus using the (PR-cre) mouse. Bmp2 gene ablation was confirmed by real-time PCR analysis in the PR-cre; Bmp2^fl/fl (termed Bmp2^d/d) uterus. While littermate controls average 0.9 litter of 6.2 ± 0.7 pups per month, Bmp2^d/d females are completely infertile. Analysis of the infertility indicates that whereas embryo attachment is normal in the Bmp2^d/d as in control mice, the uterine stroma is incapable of undergoing the decidual reaction to support further embryonic development. Recombinant human BMP2 can partially rescue the decidual response, suggesting that the observed phenotypes are not due to a developmental consequence of Bmp2 ablation. Microarray analysis demonstrates that ablation of Bmp2 leads to specific gene changes, including disruption of the Wnt signaling pathway, Progesterone receptor (PR) signaling, and the induction of prostaglandin synthase 2 (Ptgs2). Taken together, these data demonstrate that Bmp2 is a critical regulator of gene expression and function in the murine uterus.