Skeletal muscle side population (SP) cells are thought to be "stem"-like cells. Despite reports confirming the ability of muscle SP cells to give rise to differentiated progeny in vitro and in vivo, the molecular mechanisms defining their phenotype remain unclear. In this study, gene expression analyses of human fetal skeletal muscle demonstrate that bone morphogenetic protein 4 (BMP4) is highly expressed in SP cells but not in main population (MP) mononuclear muscle-derived cells. Functional studies revealed that BMP4 specifically induces proliferation of BMP receptor 1a-positive MP cells but has no effect on SP cells, which are BMPR1a-negative. In contrast, the BMP4 antagonist Gremlin, specifically up-regulated in MP cells, counteracts the stimulatory effects of BMP4 and inhibits proliferation of BMPR1a-positive muscle cells. In vivo, BMP4-positive cells can be found in the proximity of BMPR1a-positive cells in the interstitial spaces between myofibers. Gremlin is expressed by mature myofibers and interstitial cells, which are separate from BMP4-expressing cells. Together, these studies propose that BMP4 and Gremlin, which are highly expressed by human fetal skeletal muscle SP and MP cells, respectively, are regulators of myogenic progenitor proliferation.