Cardiac cushion development provides a valuable system to investigate epithelial to mesenchymal transition (EMT), a fundamental process in development and tumor progression. In the atrioventricular (AV) canal, endocardial cells lining the heart respond to a myocardial-derived signal, undergo EMT, and contribute to cushion mesenchyme. Here, we inactivated bone morphogenetic protein 2 (Bmp2) in the AV myocardium of mice. We show that Bmp2 has three functions in the AV canal: to enhance formation of the cardiac jelly, to induce endocardial EMT and to pattern the AV myocardium. Bmp2 is required for myocardial expression of Has2, a crucial component of the cardiac jelly matrix. During EMT, Bmp2 promotes expression of the basic helix-loop-helix factor Twist1, previously implicated in EMT in cancer metastases, and the homeobox genes Msx1 and Msx2. Deletion of the Bmp type 1A receptor, Bmpr1a, in endocardium also resulted in failed cushion formation, indicating that Bmp2 signals directly to cushion-forming endocardium to induce EMT. Lastly, we show that Bmp2 mutants failed to specify the AV myocardium with loss of Tbx2 expression uncovering a myocardial, planar signaling function for Bmp2. Our data indicate that Bmp2 has a crucial role in coordinating multiple aspects of AV canal morphogenesis.