Skeletal development and homeostasis are complex processes involving systemic regulatory factors and local factors present in the bone microenvironment. Among these factors, bone morphogenetic proteins (BMPs) represent the major potent bone morphogens, which coordinate with other factors to exert their multiple functions by regulating cell condensation, as well as inducing chondrogenesis and osteogenesis. This article reviews the current status of BMP signaling in skeletal development, with focus on regulation at the level of the receptors. Crosstalk of the BMP pathway with other major signaling pathways is also summarized.