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Bone morphogenetic proteins (BMPs) provide critical signals for determining cell fate, specifying gastrulation, embryonic patterning, organogenesis, and the remodeling of diverse tissues. Recent work has suggested that in addition to coordinating pivotal events in development, BMPs may also regulate certain homeostatic physiological processes independently of effects on cell growth or differentiation. We recently described the identification of dorsomorphin, a small molecule inhibitor of BMP type I receptors which inhibits BMP signaling in preference to TGF-beta, Activin, and other ligands of the TGF-beta family. We describe a number of strategies using dorsomorphin and its derivatives as probes to assess the physiologic roles of BMP signaling. We also discuss several potential applications for small molecule BMP inhibitors, including stem cell manipulation, and the therapeutic modification of bone remodeling, heterotopic ossification, and iron homeostasis.