Multiple myeloma is an incurable, bone marrow-dwelling malignancy that disrupts bone homeostasis causing skeletal damage and pain. Mechanisms underlying myeloma-induced bone destruction are poorly understood and current therapies do not restore lost bone mass. Using transcriptomic profiling of isolated bone lining cell subtypes from a murine myeloma model, we find that bone morphogenetic protein (BMP) signalling is upregulated in stromal progenitor cells. BMP signalling has not previously been reported to be dysregulated in myeloma bone disease. Inhibition of BMP signalling in vivo using either a small molecule BMP receptor antagonist or a solubilized BMPR1a-FC receptor ligand trap prevents trabecular and cortical bone volume loss caused by myeloma, without increasing tumour burden. BMP inhibition directly reduces osteoclastogenesis, increases osteoblasts and bone formation, and suppresses bone marrow sclerostin levels. In summary we describe a novel role for the BMP pathway in myeloma-induced bone disease that can be therapeutically targeted.