Proteolytic maturation of proBMP-4 is required to generate an active signaling molecule. We show that proBMP-4 is cleaved by furin in a sequential manner. Cleavage at a consensus furin site adjacent to the mature ligand domain allows for subsequent cleavage at an upstream nonconsensus furin site within the prodomain. BMP-4 synthesized from precursor in which the upstream site is noncleavable is less active, signals at a shorter range, and accumulates at lower levels than does BMP-4 cleaved from native precursor. Conversely, BMP-4 cleaved from precursor in which both sites are rapidly cleaved is more active and signals over a greater range. Differential use of the upstream cleavage site could provide for tissue-specific regulation of BMP-4 activity and signaling range.