Bone morphogenetic proteins (BMPs) have an emerging role in human cancers. Here we demonstrate that the BMP-signaling pathway is intact and functional in human pancreatic cancer cells, with several BMP signaling components and transcriptional targets upregulated in human pancreatic cancer specimens compared with normal pancreatic tissue. Functionally, multiple BMP family members, including BMP-2, BMP-4 and BMP-7, induce an epithelial to mesenchymal transition (EMT) in the human pancreatic cancer cell line Panc-1, as demonstrated by morphological alterations and loss of E-cadherin expression. BMP-mediated EMT results in an increase in invasiveness of Panc-1 cells, in part through increased expression and activity of matrix metalloproteinase (MMP)-2, a known mediator of pancreatic cancer cell invasiveness. Accompanying EMT, BMP reduces expression of the transforming growth factor (TGF)-beta superfamily receptor, transforming growth factor-beta type III receptor (TbetaRIII), for which we have previously demonstrated loss of expression during pancreatic cancer progression. Maintaining TbetaRIII expression inhibits BMP-mediated invasion and suppresses Smad1 activation. Further, Smad1 is required for BMP-induced invasiveness and partially responsible for BMP-mediated increases in MMP-2 activity. These data suggest that BMP signaling, through Smad1 induction and upregulation of MMP-2, is an important mediator of pancreatic cancer invasiveness and a potential therapeutic target for treating this deadly disease.