the only known BMP receptor substrates capable of transducing the signal, are also differentially expressed in the developing cerebellum: Smad1 in the external germinal layer and Smad5 in newly differentiated granule neurones. Among them, only Smad5 is phosphorylated in vivo and in primary cultures treated with Bmp2, and overexpression of Smad5 is sufficient to induce granule cell differentiation in the presence of Shh. We propose a model in which Bmp2-mediated Smad5 signalling suppresses the proliferative response to Shh by downregulation of the pathway, and allows granule cell precursor to enter their differentiation programme.