Anemia of inflammation develops in settings of chronic inflammatory, infectious, or neoplastic disease. In this highly prevalent form of anemia, inflammatory cytokines, including IL-6, stimulate hepatic expression of hepcidin, which negatively regulates iron bioavailability by inactivating ferroportin. Hepcidin is transcriptionally regulated by IL-6 and bone morphogenetic protein (BMP) signaling. We hypothesized that inhibiting BMP signaling can reduce hepcidin expression and ameliorate hypoferremia and anemia associated with inflammation. In human hepatoma cells, IL-6–induced hepcidin expression, an effect that was inhibited by treatment with a BMP type I receptor inhibitor, LDN-193189, or BMP ligand antagonists noggin and ALK3-Fc. In zebrafish, the induction of hepcidin expression by transgenic expression of IL-6 was also reduced by LDN-193189. In mice, treatment with IL-6 or turpentine increased hepcidin expression and reduced serum iron, effects that were inhibited by LDN-193189 or ALK3-Fc. Chronic turpentine treatment led to microcytic anemia, which was prevented by concurrent administration of LDN-193189 or attenuated when LDN-193189 was administered after anemia was established. Our studies support the concept that BMP and IL-6 act together to regulate iron homeostasis and suggest that inhibition of BMP signaling may be an effective strategy for the treatment of anemia of inflammation.