Fibroblast proliferation, differentiation, and migration contribute to the characteristic pulmonary vascular remodeling seen in primary pulmonary hypertension (PPH). The identification of mutations in the bone morphogenetic protein type II receptor (BMPRII) in PPH have led us to question what role BMPRII and its ligands play in pulmonary vascular remodeling. Thus, to further understand the functional significance of BMPRII in the pulmonary vasculature, we examined the expression of TGF-β superfamily receptors in human fetal lung fibroblasts (HFL) and investigated the role of BMP4 on cell cycle regulation, fibroblast proliferation, and differentiation. Furthermore, signaling pathways involved in these processes were examined. HFL expressed BMPRI and BMPRII mRNA and demonstrated specific I¹²⁵-BMP4 binding sites. BMP4 inhibited [³H]thymidine incorporation and proliferation of HFL; protein expression was increased for the cell cycle inhibitor p21 and reduced for the positive regulators cyclin D and cdk2 by BMP4. BMP4 induced differentiation of HFL into a smooth muscle cell phenotype since protein expression of α-smooth muscle actin and smooth muscle myosin was increased. Furthermore, p38^MAPK, ERK1/2, JNK, and Smad1 were phosphorylated by BMP4. Using specific MAPK inhibitors, a dominant negative Smad1 construct, and Smad1 siRNA, we found that the antiproliferative and prodifferentiation effects of BMP4 were Smad1 dependent with JNK also contributing to differentiation. Because failure of Smad phosphorylation is a major feature of BMPRII mutations, these results imply that BMPRII mutations may promote the expansion of fibroblasts resistant to the antiproliferative, prodifferentiation effects of BMPs and suggest a mechanism for the vascular obliteration seen in familial PPH.