Bone morphogenetic proteins, BMPs, are members of the transforming growth factor-beta (TGF-beta) superfamily, which are implicated in embryogenesis, organogenesis, skeletogenesis, osteogenesis, cellular differentiation and apoptosis by regulating the expression of specific target genes. Recent progresses in studying the BMP signaling reveal that a cytoplasmic protein family, Smad, plays a central role in mediating the biological effects of BMPs. Smad transduces the signal from the cytoplasm to the nucleus where Smad regulates the transcription of the target genes through the direct association with the specific biding elements or with assistance of other transcription factors or co-activators such as p300/CBP. In addition, the signals mediated by Smad are also positively or negatively controlled by cross-talks with other hormone, growth factor or cytokine signalings, thereby modulating the biological actions of BMPs. Moreover, Smad signaling has negative feedback regulations at the cytoplasmic or nuclear level, which are important to restrict or terminate the biological effect of BMPs. Here we provide an overview of recent knowledge about the roles of Smad family in the regulation of BMP signaling.