Arteriovenous malformations (AVMs) in organs, such as the lungs, intestine, and brain, are characteristic of hereditary hemorrhagic telangiectasia (HHT), a disease caused by mutations in activin-like kinase receptor 1 (ALK1), which is an essential receptor in angiogenesis, or endoglin. Matrix Gla protein (MGP) is an antagonist of BMPs that is highly expressed in lungs and kidneys and is regulated by ALK1. The objective of this study was to determine the role of MGP in the vasculature of the lungs and kidneys. We found that Mgp gene deletion in mice caused striking AVMs in lungs and kidneys, where overall small organ size contrasted with greatly increased vascularization. Mechanistically, MGP deficiency increased BMP activity in lungs. In cultured lung epithelial cells, BMP-4 induced VEGF expression through induction of ALK1, ALK2, and ALK5. The VEGF secretion induced by BMP-4 in Mgp-/- epithelial cells stimulated proliferation of ECs. However, BMP-4 inhibited proliferation of lung epithelial cells, consistent with the increase in pulmonary vasculature at the expense of lung tissue in the Mgp-null mice. Similarly, BMP signaling and VEGF expression were increased in Mgp-/- mouse kidneys. We therefore conclude that Mgp gene deletion is what we believe to be a previously unidentified cause of AVMs. Because lack of MGP also causes arterial calcification, our findings demonstrate that the same gene defect has drastically different effects on distinct vascular beds.