Oestrogen receptor expression is generally a sign of better tumour differentiation and comparatively good clinical outcome in invasive breast cancer. However, oestrogen receptor-positive, poorly differentiated carcinomas with a poor clinical outcome exist. The underlying genetic mechanisms and the genes involved remain obscure, even though chromosome 7p gains seem to be associated with these uncommon tumours. In this study, we compared two subsets of oestrogen receptor-positive breast cancers, which differed in tumour grade, cytogenetic instability, and tumour proliferation, for their differential gene expression in order to identify proteins involved in the progression of oestrogen receptor-positive breast cancers. We were able to show by means of subtractive suppression hybridization, real-time reverse transcriptase PCR, and tissue microarray analysis that expression of the bone morphogenetic protein receptor IB (BMPR-IB) is a major hallmark of the progression and dedifferentiation of breast cancer. Strong expression of BMPR-IB was associated with high tumour grade, high tumour proliferation, cytogenetic instability, and a poor prognosis in oestrogen receptor-positive carcinomas. Western blot analysis revealed that downstream signalling of this receptor is mainly mediated via phosphorylation of SMAD 1 in oestrogen receptor-positive breast cancer. Even though BMPR-IB was expressed in oestrogen receptor-positive and -negative breast cancers, an impact on tumour grade, proliferation, and cytogenetic instability, as parameters of tumour progression, could only be demonstrated in oestrogen receptor-positive carcinomas. This pro-proliferative effect was complemented by significant anti-apoptotic activity, indicated by XIAP and IAP-2 expression in BMPR-IB-positive carcinomas. These results show that the BMP/SMAD pathway is activated in breast cancer and may contribute to breast cancer progression and dedifferentiation in oestrogen receptor-positive breast cancer. The definition of this pathway characterizes a new potential target in the molecular treatment of invasive breast cancer. Copyright © 2005 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.