The bone morphogenetic protein (BMP) signaling pathway is a conserved and evolutionarily ancient regulatory module affecting a large variety of cellular behaviors. The evolutionary flexibility in using BMP responses presumably arose by co-option of a canonical BMP signaling cascade to regulate the transcription of diverse batteries of target genes. This begs the question of how seemingly interchangeable BMP signaling components elicit widely different outputs in different cell types, an important issue in the context of understanding how BMP signaling integrates with gene regulatory networks to control development. Because a molecular understanding of how BMP signaling activates different batteries of target genes is an essential prerequisite to comprehending the roles of BMPs in regulating cellular responses, here we review the current knowledge of how BMP-regulated target genes are selected by the signal transduction machinery. We highlight recent studies suggesting the evolutionary conservation of BMP target gene regulation signaling by Schnurri family zinc finger proteins. Developmental Dynamics 238:1321–1331, 2009. © 2009 Wiley-Liss, Inc.