Ventral midbrain (VM) dopaminergic (DA) neurons, which project to the dorsal striatum via the nigrostriatal pathway, are progressively degenerated in Parkinson’s disease (PD). The identification of the instructive factors that regulate midbrain DA neuron development, and the subsequent elucidation of the molecular bases of their effects, is vital. Such an understanding would facilitate the generation of transplantable DA neurons from stem cells and the identification of developmentally-relevant neurotrophic factors, the two most promising therapeutic approaches for PD. Two related members of the bone morphogenetic protein (BMP) family, BMP2 and growth/differentiation factor (GDF) 5, which signal via a canonical Smad 1/5/8 signalling pathway, have been shown to have neurotrophic effects on midbrain DA neurons both in vitro and in vivo, and may function to regulate VM DA neuronal development. However, the molecular (signalling pathway(s)) and cellular (direct neuronal or indirect via glial cells) mechanisms of their effects remain to be elucidated. The present thesis hypothesised that canonical Smad signalling mediates the direct effects of BMP2 and GDF5 on the development of VM DA neurons. By activating, modulating and/or inhibiting various components of the BMP-Smad signalling pathway, this research demonstrated that GDF5- and BMP2-induced neurite outgrowth from midbrain DA neurons is dependent on BMP type I receptor activation of the Smad signalling pathway. The role of glial cell-line derived neurotrophic factor (GDNF)-signalling, dynamin-dependent endocytosis and Smad interacting protein-1 (Sip1) regulation, in the neurotrophic effects of BMP2 and GDF5 were determined. Finally, the in vitro development of VM neural stem cells (NSCs) was characterised, and the ability of GDF5 and BMP2 to induce these VM NSCs towards DA neuronal differentiation was investigated. Taken together, these experiments identify GDF5 and BMP2 as novel regulators of midbrain DA neuronal induction and differentiation, and demonstrate that their effects on DA neurons are mediated by canonical BMPR-Smad signalling