The stratification and differentiation of the epidermis are known to involve the precise control of multiple signaling pathways. By contrast, little is known about the development of the mouse esophagus and forestomach, which are composed of a stratified squamous epithelium. Based on prior work in the skin, we hypothesized that bone morphogenetic protein (BMP) signaling is a central player. To test this hypothesis, we first used a BMP reporter mouse line harboring a BRE-lacZ allele, along with in situ hybridization to localize transcripts for BMP signaling components, including various antagonists. We then exploited a Shh-Cre allele that drives recombination in the embryonic foregut epithelium to generate gain- or loss-of-function models for the Bmpr1a (Alk3) receptor. In gain-of-function (Shh-Cre;Rosa26CAG-loxpstoploxp-caBmprIa) embryos, high levels of ectopic BMP signaling stall the transition from simple columnar to multilayered undifferentiated epithelium in the esophagus and forestomach. In loss-of-function experiments, conditional deletion of the BMP receptor in Shh-Cre;Bmpr1aflox/flox embryos allows the formation of a multilayered squamous epithelium but this fails to differentiate, as shown by the absence of expression of the suprabasal markers loricrin and involucrin. Together, these findings suggest multiple roles for BMP signaling in the developing esophagus and forestomach.