Bone Morphogenetic Proteins (BMPs) play crucial roles in a variety of developmental processes, but their functions during early vertebrate brain development are largely unknown. To investigate this problem, we have compared by in situ hybridization the expression of five Bmp genes belonging to the Drosophila Decapentaplegic (Bmp2 and Bmp4) and 60A subgroups (Bmp5, Bmp6 and Bmp7). Striking co-expression of these Bmps is observed within the dorsomedial telencephalon, coincident with a future site of choroid plexus development. Bmp co-expression overlaps that of Msx1 and Hfh4, and is complementary to that of Bf1. The domain of Bmp co-expression is also associated with limited growth of the neuroectoderm, as revealed by morphological observation, reduced cell proliferation, and increased local programmed cell death. In vitro experiments using explants from the embryonic lateral telencephalic neuroectoderm reveal that exogenous BMP proteins (BMP4 and BMP2) induce expression of Msx1 and inhibit Bf1 expression, a finding consistent with their specific expression patterns in vivo. Moreover, BMP proteins locally inhibit cell proliferation and increase apoptosis in the explants. These results provide evidence that BMPs function during regional morphogenesis of the dorsal telencephalon by regulating specific gene expression, cell proliferation and local cell death.