Vascular smooth muscle cells (VSMCs), unlike other muscle cells, do not terminally differentiate. In response to injury, VSMCs change phenotype, proliferate and migrate as part of the repair process. Dysregulation of this plasticity program contributes to the pathogenesis of several vascular disorders, such as atherosclerosis, restenosis and hypertension. The discovery of mutations in the gene encoding BMPRII, the type II subunit of the receptor for Bone Morphogenetic Proteins (BMPs), in patients with pulmonary arterial hypertension (PAH) provided an indication that BMP signaling may affect the homeostasis of VSMCs and their phenotype modulation. Here we report that BMP signaling potently induces SMC specific genes in pluripotent cells, and prevents dedifferentiation of arterial SMCs. The BMP induced phenotype switch requires intact RhoA/ROCK signaling, but is not blocked by inhibitors of the TGF and PI-3K/Akt pathways. Furthermore, nuclear localization and recruitment of the myocardin-related transcription factors (MRTF-A and MRTF-B) to a SM -actin (SMA) promoter is observed in response to BMP treatment. Thus, BMP signaling modulates VSMC phenotype via cross talk with the RhoA/MRTFs pathway, and may contribute to the development of the pathological characteristics observed in patients with PAH and other obliterative vascular diseases.