Brain colonization by metastatic tumor cells offers a unique opportunity to investigate microenvironmental influences on the neoplastic process. The bi-directional interplay of breast cancer cells (mesodermal origin) and brain cells (neuroectodermal origin) is poorly understood and rarely investigated. In our patients undergoing neurosurgical resection of breast-to-brain metastases, specimens from the tumor/brain interface exhibited increased active gliosis as previously described. In addition, our histological characterization revealed infiltration of neural progenitor cells (NPCs) both outside and inside the tumor margin, leading us to investigate the cellular and molecular interactions between NPCs and metastases. Since signaling by the TGF-β superfamily is involved in both developmental neurobiology and breast cancer pathogenesis, we examined the role of these proteins in the context of brain metastases. The brain-metastatic breast cancer cell line MDA-MB-231Br (231Br) expressed BMP-2 at significantly higher levels compared to its matched primary breast cancer cell line MDA-MB-231 (231). Co-culturing was used to examine bi-directional cellular effects and the relevance of BMP-2 overexpression. When co-cultured with NPCs, 231 (primary) tumor cells failed to proliferate over 15 days. However, 231Br (brain metastatic) tumor cells co-cultured with NPCs escaped growth inhibition after day 5 and proliferated, occurring in parallel with NPC differentiation into astrocytes. Using shRNA and gene knock-in, we then demonstrated BMP-2 secreted by 231Br cells mediated NPC differentiation into astrocytes and concomitant tumor cell proliferation in vitro. In xenografts, overexpression of BMP-2 in primary breast cancer cells significantly enhanced their ability to engraft and colonize the brain, thereby creating a metastatic phenotype. Conversely, BMP-2 knockdown in metastatic breast cancer cells significantly diminished engraftment and colonization. The results suggest metastatic tumor cells create a permissive neural niche by steering NPC differentiation toward astrocytes through paracrine BMP-2 signaling.