Bone morphogenetic protein‐4 (BMP‐4), a member of the transforming growth factor‐β (TGF‐β) family, regulates several developmental processes during animal development. We have now studied the effects of BMP‐4 in the metanephric kidney differentiation by using organ culture technique. Human recombinant BMP‐4 diminishes the number of ureteric branches and changes the branching pattern. Our data suggest that BMP‐4 affects the ureteric branching indirectly via interfering with the differentiation of the nephrogenic mesenchyme. The clear positional preference of the defects to posterior mesenchyme might reflect an early anterior‐posterior patterning of the metanephric mesenchyme. The smooth muscle α‐actin expressing cell population around the ureteric stalk, highly expressing Bmp‐4 mRNA, is also expanded in kidneys treated with BMP‐4. Thus, BMP‐4 may be a physiological regulator of the development of the periureteric smooth muscle layer and ureteric elongation. Dev Dyn;217:146–158. © 2000 Wiley‐Liss, Inc.