We have recently shown that angiotensin II-mediated uncoupling of endothelial nitric oxide synthase (eNOS) contributes to endothelial dysfunction in streptozotocin-induced type 1 diabetes mellitus. However, it has remained unclear whether and how eNOS uncoupling occurs in type 2 diabetes mellitus (T2DM) and the consequences of such in regulating vascular function. Here we investigated a role of bone morphogenic protein (BMP)-4 in mediating eNOS uncoupling, endothelial dysfunction, and inflammation in db/db mice. Circulating levels of BMP4 were markedly elevated in db/db mice but not in mice with type 1 diabetes mellitus, in which angiotensin II levels were significantly increased. Infusion of BMP4 antagonist noggin into db/db mice (15 μg/kg/day, 4 weeks) abolished eNOS uncoupling activity while restoring tetrahydrobiopterin (H(4)B) bioavailability. The impaired endothelium-dependent vasorelaxation in db/db aortas was significantly improved by noggin infusion. Exposure of aortic endothelial cells to BMP4 (50 ng/mL, 24 hours) resulted in eNOS uncoupling, which was attenuated by H(4)B precursor sepiapterin or small interfering RNA silencing nicotinamide adenine dinucleotide phosphate oxidase isoform 1 (NOX1). Interestingly, BMP4-dependent NOX1 up-regulation was abrogated by sepiapterin, implicating a NOX1-uncoupled eNOS-NOX1 feed-forward loop. BMP4 induction of cyclooxygenase 2 (COX2) expression and vascular cell adhesion protein 1 was found in db/db mice. Consistently, COX2 was up-regulated by BMP4 in endothelial cells, which was attenuated by sepiapterin, implicating an upstream role of eNOS uncoupling in COX2-mediated inflammatory activation. Taken together, our data for the first time reveal a novel role of BMP4 in inducing NOX1-dependent eNOS uncoupling in T2DM, which may promote development of novel therapeutics restoring endothelial function in T2DM.