Mutations in the bone morphogenetic protein type II receptor gene (BMPR2) are the major genetic cause of familial pulmonary arterial hypertension (FPAH). Although smooth muscle cell proliferation contributes to the vascular remodeling observed in PAH, the role of BMPs in this process and the impact of BMPR2 mutation remains unclear. Studies involving normal human pulmonary artery smooth muscle cells (PASMCs) suggest site-specific responses to BMPs. Thus, BMP-4 inhibited proliferation of PASMCs isolated from proximal pulmonary arteries, but stimulated proliferation of PASMCs from peripheral arteries, and conferred protection from apoptosis. These differences were not caused by differential activation of BMP signaling pathways because exogenous BMP-4 led to phosphorylation of Smad1, p38^MAPK, and ERK1/2 in both cell types. However, the proproliferative effect of BMP-4 on peripheral PASMCs was found to be p38^MAPK/ERK-dependent. Conversely, overexpression of dominant-negative Smad1 converted the response to BMP-4 in proximal PASMCs from inhibitory to proliferative. Furthermore, we confirmed that proximal PASMCs harboring kinase domain mutations in BMPR2 are deficient in Smad signaling and are unresponsive to the growth suppressive effect of BMP-4. Moreover, we show that the pulmonary vasculature of patients with familial and idiopathic PAH are deficient in the activated form of Smad1. We conclude that defective Smad signaling and unopposed p38^MAPK/ERK signaling, as a consequence of mutation in BMPR2, underlie the abnormal vascular cell proliferation observed in familial PAH.