Signaling by bone morphogenetic proteins is essential for a wide variety of developmental processes. Receptor-regulated Smad proteins, Smads 1 and 5, are intracellular mediators of bone morphogenetic protein signaling. Together with Smad4, these proteins translocate to the nucleus and modulate transcription by binding to specific sequences on the promoters of target genes. We sought to map transcriptional Smad1/5 activity in development by generating embryonic stem cell lines carrying a Smad1/5-specific response element derived from th