The bone morphogenetic proteins (BMPs) Smad4 and Id2 exert their effect on colorectal carcinoma via several uncharacterized mechanisms. In this study, we investigated whether the transcription factor Id2, which has been implicated in colorectal carcinoma proliferation and metastasis, is involved in BMP-7/Smad4 signaling, or whether it is regulated by BMP-7 via another mechanism in this cell type. A Smad4-cDNA vector was constructed and stably transfected into SW480 cells. Protein levels of Smad4 and Id2 were examined by Western blotting. Inhibitory effects on cellular proliferation activity were determined by the methyl thiazolyl tetrazolium (MTT) assay, and invasion and migration potential was detected using the in vitro Matrigel-coated invasion and migration assay. Levels of Smad4 protein were significantly increased in SW480 cells transfected with Smad4-cDNA, compared to those transfected with empty vector. Growth curve analysis revealed that live cell numbers were lower in the Smad4-expressing group than in the control group after 36 h, and that BMP7 treatment caused an increase in live cell numbers in Smad4-expressing cells. Transwell chamber analysis revealed that migration/invasion activity was significantly suppressed when Smad4 was expressed. Finally, Smad4-expressing cells treated with BMP7 expressed a higher level of Id2 protein than the controls. The results indicate that Smad4 expression may inhibit the growth and invasion of SW480 cells, and that BMP7 affects Id2 levels through Smad4. Therefore, BMP7-Smad4-Id2 signaling may play a significant role in the development of colorectal carcinoma.