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Leukemic stem cells in chronic phase chronic myelogenous leukemia (CP-CML) are responsible for disease persistence and eventual drug resistance, most likely because they survive, expand, and are sustained through interactions with their microenvironment. Bone morphogenetic proteins 2 (BMP2) and 4 (BMP4) regulate the fate and proliferation of normal hematopoietic stem cells, as well as interactions with their niche. We show here that the intrinsic expression of members of the BMP response pathway are deregulated in CML cells with differences exhibited in mature (CD34(-)) and immature (CD34(+)) compartments. These changes are accompanied by altered functional responses of primitive leukemic cells to BMP2 and BMP4 and strong increases in soluble BMP2 and BMP4 in the CML bone marrow. Using primary cells and a cell line mimicking CP-CML, we found that myeloid progenitor expansion is driven by the exposure of immature cells overexpressing BMP receptor Ib to BMP2 and BMP4. In summary, we demonstrate that deregulation of intracellular BMP signaling in primary CP-CML samples corrupts and amplifies their response to exogenous BMP2 and BMP4, which are abnormally abundant within the tumor microenvironment. These results provide new insights with regard to leukemic stem cell biology and suggest possibilities for the development of novel therapeutic tools specifically targeting the CML niche.