Tracheal agenesis/atresia (TA) is a rare but fatal congenital disease in which the breathing tube fails to grow. The etiology of this serious condition remains largely unknown. We found that Bmp signaling is prominently present in the anterior foregut where the tracheal primordium originates and targeted ablation of Bmp4 (Bmp4(cko)) resulted in a loss-of-trachea phenotype that closely resembles the Floyd type II pathology, the most common form of TA in humans. In Bmp4(cko) embryos, tracheal specification was not affected; however, its outgrowth was severely impaired due to reduced epithelial and mesenchymal proliferation. In agreement, we also observed significant reduction in the expression of Cyclin D1, a key cell cycle regulator associated with cellular proliferation. However, the proliferative effect of Bmp signaling appears to be independent of Wnt signaling. Interestingly, we found significantly reduced expression of activated extracellular signal-regulated kinase (Erk) in the Bmp4(cko) ventral foregut, suggesting that Bmp signaling promotes Erk phosphorylation which has been associated with cellular proliferation. This study provides the first evidence linking Bmp signaling to tracheal formation by regulating the proliferative response of the anterior ventral foregut. Our finding sheds light on human tracheal malformations by providing a novel mouse model implicating Bmp signaling, non-canonical Erk activation and cellular proliferation.