Striking similarities exist between molecular mechanisms driving embryonic liver development and progression of hepatocellular carcinoma (HCC). Bone morphogenetic proteins (BMPs), particularly BMP4, have been proposed to regulate embryonic hepatic development. BMP expression has been observed in neoplasia but the expression and biological role of BMP4 in human HCC are unknown. We found increased BMP4 mRNA and protein in HCC cell lines and tissue samples compared to primary human hepatocytes and corresponding non-tumourous tissue. Hypoxia further induced BMP4 expression in HCC cells, which was abolished by transfection of a dominant negative form of HIF-1 alpha (dnHIF-1 alpha). However, gel shift assays revealed only minor binding activity in nuclear extracts from (hypoxic) HCC cells to a putative hypoxia-response element in the BMP4 promoter. Sequence analysis of the BMP4 promoter revealed two Ets-1 binding sites, and Ets-1 activity was increased in HCC cells under hypoxic conditions. Transfection of dnHIF-1 alpha completely abrogated hypoxia-induced Ets-1 activity as well as BMP4 expression. Overexpression of Ets-1 markedly enhanced BMP4 promoter activity, while antisense Ets-1 almost completely abolished basal as well as hypoxia-induced BMP4 expression. These data demonstrate that Ets-1 activity contributes to baseline expression of the BMP4 gene and is the predominant mediator of the HIF-dependent BMP4 induction under hypoxic conditions. To determine the functional relevance of BMP4 expression, HCC cell lines were treated with antisense BMP4 constructs or siRNA against BMP4. BMP4 suppression resulted in a strong reduction of the migratory and invasive potential and anchorage-independent growth. Furthermore, tube formation assays indicated that BMP4 expressed by HCC cells promotes vasculogenesis. Our findings demonstrate that BMP4 is increased in HCC and promotes HCC progression. Therefore, BMP4 expression may have clinical relevance, and interfering with BMP4 signalling appears as an attractive therapeutic target for this highly aggressive tumour.