The transforming growth factor β (TGFβ) family embraces many growth factors including the Activins and bone morphogenetic proteins (BMPs). The pathways mediated by these growth factors are implicated in many fundamental biological processes such as early embryonic development, organ morphogenesis and adult tissue homeostasis and in a large number of pathologies including cancer. The action of these pathways is often contextual, which means that different cell types present different physiological responses to these ligands or that the response of one cell type to a certain ligand differs depending on the presence of other signaling proteins that stimulate the target cell together with TGFβ/BMP. The latter usually reflects developmental stage or progression to a specific pathological stage. Not only diverse growth factors and cytokines can influence the response of tissues to TGFβ/BMP, but a single cell type may also show drastically different physiological outcomes to TGFβ or Activin signaling as compared to BMP signaling. This review describes differential physiological outcomes of TGFβ and BMP signaling in normal embryonic or adult stem cells and eventually in cancer stem cells and the process of epithelial-mesenchymal transition. We also summarize evidence on the mechanistic antagonism between TGFβ and BMP signaling as established in vascular differentiation and the progression of tissue fibrosis and cancer. The article ends by discussing possible advantages that the acquired knowledge of these signaling mechanisms offers to new regimes of cancer therapy and the ever-lasting problem of drug resistance elicited by tumor initiating cells.