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Systemic iron balance is regulated by hepcidin, a peptide hormone secreted by the liver. By decreasing cell surface expression of the iron exporter ferroportin, hepcidin decreases iron absorption from the intestine and iron release from reticuloendothelial stores. Hepcidin excess has been implicated in the pathogenesis of anemia of chronic disease, while hepcidin deficiency has a key role in the pathogenesis of the iron overload disorder hemochromatosis. We have recently shown that hemojuvelin is a coreceptor for bone morphogenetic protein (BMP) signaling and that BMP signaling positively regulates hepcidin expression in liver cells in vitro. Here we show that BMP-2 administration increases hepcidin expression and decreases serum iron levels in vivo. We also show that soluble hemojuvelin (HJV.Fc) selectively inhibits BMP induction of hepcidin expression in vitro and that administration of HJV.Fc decreases hepcidin expression, increases ferroportin expression, mobilizes splenic iron stores, and increases serum iron levels in vivo. These data support a role for modulators of the BMP signaling pathway in treating diseases of iron overload and anemia of chronic disease.