Bone morphogenetic protein (BMP) signalling is essential for correct lung development where it mediates lung branching morphogenesis. In the adult lung, the BMP pathway is activated during airway inflammation. However, a role for activated BMP signalling has not yet been elucidated. The aims of this project were to identify a role for BMP signalling in adult airway epithelial cells (AECs) and to further investigate BMP signalling during airway inflammation. AECs used included the transformed bronchial cell line, BEAS-2B, the adenocarcinoma-derived cell line, A549, and normal primary murine airway epithelial cells (MAECs). BMP2 and BMP4 inhibited E-cadherin expression in BEAS-2B cells. In addition, BMP4 induced an epithelial-mesenchymal transition (EMT) in BEAS-2B where cells acquired a mesenchymal phenotype including fibroblast-like morphology and increased mesenchymal gene expression. Investigation of BMP4-mediated signalling in A549 cells revealed hydrocortisone (HC) as a determining factor where in the presence of HC A549 cells adopted a senescent-like phenotype and in the absence of HC cells underwent an EMT-like change in phenotype in the response to BMP4. Further analysis of BMP4-mediated effects in normal primary MAECs revealed downregulation of E-cadherin expression and a concurrent increase in expression of the transcriptional repressor of E-cadherin, Snail1. To further investigate the involvement of BMP signalling in airway inflammation, BMP pathway components were assessed in nasal biopsies from individuals with allergic rhinitis (AR). In AR nasal biopsies, the BMP pathway was found to be modulated with the apparent relocalisation of the BMP receptor, BMPR-IA, to the nucleus of airway epithelial cells. Furthermore, this nuclear localisation was recapitulated in normal primary MAECs co-cultured with eosinophils or stimulated with eosinophil cationic proteins. These data further implicate BMP signalling in the pathogenesis of lung inflammation where activated BMP signalling may be involved in remodelling processes.