Bone morphogenetic protein (BMP) expression and signaling are altered in a variety of cancers, but the functional impact of these alterations is uncertain. In this study we investigated the impact of expression of multiple BMPs and their signaling pathway components in human B-cell lymphoma. BMP messages, in particular BMP7, were detected in normal and malignant B cells. Addition of exogenous BMPs inhibited DNA synthesis in most lymphoma cell lines examined, but some cell lines were resistant. Tumor specimens from three out of five lymphoma patients were also resistant to BMPs, as determined by no activation of the BMP effectors Smad1/5/8. We have previously shown that BMP-7 potently induced apoptosis in normal B cells, which was in contrast to no or little inhibitory effect of this BMP in the lymphoma cells tested. BMP-resistance mechanisms were investigated by comparing sensitive and resistant cell lines. While BMP receptors are downregulated in many cancers, we documented similar receptor levels in resistant and sensitive lymphoma cells. We found a positive correlation between activation of Smad1/5/8 and inhibition of DNA synthesis. Gene expression analysis of two independent data sets showed that the levels of inhibitory Smads varied across different B-cell lymphoma. Furthermore, stable overexpression of Smad7 in two different BMP-sensitive cell lines with low endogenous levels of SMAD7, rendered them completely resistant to BMPs. This work highlights the role of Smads in determining the sensitivity to BMPs and shows that upregulation of Smad7 in cancer cells is sufficient to escape the negative effects of BMPs.