Repulsive guidance molecule b (RGMb) is a bone morphogenetic protein (BMP) co-receptor and sensitizer of BMP signaling, highly expressed in adult dorsal root ganglion (DRG) sensory neurons. We used a murine RGMb knockout to gain insight into the physiological role of RGMb in the DRG, and address if RGMb-mediated modulation of BMP signaling influences sensory axon regeneration. No evidence for altered development of the peripheral and central nervous systems was detected in RGMb −/− mice. However, both cultured neonatal whole DRG explants and dissociated DRG neurons from RGMb −/− mice exhibited significantly fewer and shorter neurites than those from wildtype littermates, a phenomenon that could be fully rescued by BMP-2. Moreover, Noggin, an endogenous BMP signaling antagonist, inhibited neurite outgrowth in wild type DRG explants from naïve as well as nerve injury-preconditioned mice. Noggin is downregulated in the DRG after nerve injury, and its expression is highly correlated and inversely associated with the known regeneration-associated genes, which are induced in the DRG by peripheral axonal injury. We show that diminished BMP signaling in vivo, achieved either through RGMb deletion or BMP inhibition with Noggin, retarded early axonal regeneration after sciatic nerve crush injury. Our data suggest a positive modulatory contribution of RGMb and BMP signaling to neurite extension in vitro and early axonal re-growth after nerve injury in vivo and a negative effect of Noggin.