There are conflicting reports about whether BMP signaling is required for eyelid closure during fetal development. This question was addressed using mice deficient in BMP or TGFbeta signaling in prospective eyelid and conjunctival epithelial cells. Genes encoding two type I BMP receptors, the type II TGFbeta receptor, two BMP- or two TGFbeta-activated R-Smads or the co-Smad Smad4 were deleted from the ocular surface ectoderm using Cre recombinase. Only mice with deletion of components of the BMP pathway had an 'eyelid open at birth' phenotype. Mice lacking Fgf10 or Fgfr2 also have open eyelids at birth. To better understand the pathways that regulate BMP expression and function during eyelid development, we localized BMPs and BMP signaling intermediates in Fgfr2 and Smad4 conditional knockout (CKO) mice. We found that Fgfr2 was required for the expression of Bmp4, the normal distribution of Shh signaling and for preserving the differentiation of the conjunctival epithelium. FGF signaling also promoted the expression of the Wnt antagonist Sfrp1 and suppressed Wnt signaling in the prospective eyelid epithelial cells, independently of BMP function. Transcripts encoding Foxc1 and Foxc2, which were previously shown to be necessary for eyelid closure, were not detectable in Smad4(CKO) animals. c-Jun, another key regulator of eyelid closure, was present and phosphorylated in eyelid periderm cells at the time of fusion, but failed to translocate to the nucleus in the absence of BMP function. Smad4(CKO) mice also showed premature differentiation of the conjunctival epithelium, conjunctival hyperplasia and the acquisition of epidermal characteristics, including formation of an ectopic row of hair follicles in place of the Meibomian glands. A second row of eyelashes is a feature of human lymphedema-distichiasis syndrome, which is associated with mutations in FOXC2.