Degeneration of the rotator cuff is often associated with inflammation of the subacromial bursa and focal mineralization of the supraspinatus tendon. Portions of the supraspinatus tendon distant from the insertion site could transform into fibrous cartilage, causing rotator-cuff tears owing to mechanical instability. Indirect evidence is presented to link this pathology to ectopic production and secretion of bioactive bone morphogenetic proteins (BMPs) from sites within the subacromial bursa. Surgically removed specimens of subacromial bursa tissue from patients with chronic tears of the rotator cuff were analyzed by immunohistochemistry and reverse transcription-PCR. Bioactive BMP was detected in bursa extracts by a bioassay based on induction of alkaline phosphatase in the osteogenic/myogenic cell line C2C12. Topical and differential expression of BMP-2/4 and BMP-7 mRNA and protein was found in bursa tissue. The bioassay of C2C12 cells revealed amounts of active BMP high enough to induce osteogenic cell types, and blocking BMP with specific antibodies or soluble BMP receptors Alk-3 and Alk-6 abolished the inductive properties of the extract. Sufficient information was gathered to explain how ectopic expression of BMP might induce tissue transformation into ectopic bone/cartilage and, therefore, promote structural degeneration of the rotator cuff. Early surgical removal of the subacromial bursa might present an option to interrupt disease progression.