In olfactory epithelium (OE) cultures, bone morphogenetic proteins (BMPs) can strongly inhibit neurogenesis. Here we provide evidence that BMPs also promote, and indeed are required, for OE neurogenesis. Addition of the BMP antagonist noggin inhibited neurogenesis in OE-stromal cell co-cultures. Bmp2, Bmp4 and Bmp7 were expressed by OE stroma, and low concentrations of BMP4 (below the threshold for inhibition of neurogenesis) stimulated neurogenesis; BMP7 did not exhibit a stimulatory effect at any concentration tested. Stromal cell conditioned medium also stimulated neurogenesis; part of this effect was due to the presence within it of a noggin-binding factor or factors. Studies of the pro-neurogenic effect of BMP4 indicated that it did not increase progenitor cell proliferation, but rather promoted survival of newly generated olfactory receptor neurons. These findings indicate that BMPs exert both positive and negative effects on neurogenesis, depending on ligand identity, ligand concentration and the particular cell in the lineage that is responding. In addition, they reveal the presence of a factor or factors, produced by OE stroma, that can synergize with BMP4 to stimulate OE neurogenesis.