Bone morphogenetic protein 2 (BMP-2) has been reported to facilitate epithelial-to-mesenchymal transition (EMT) and bone metastasis in breast cancer xenograft models. To investigate the role of BMP-2 in the development of breast cancer stem cells (BCSCs), and to further elucidate the mechanisms underlying its influence on breast cancer metastasis, we conducted a comprehensive molecular study using breast cancer cell lines and clinical samples. Our results showed that downregulation of Rb by BMP-2 was associated with ubiquitin-mediated degradation activated by phosphorylation of Rb via the PI3K/AKT signal pathway. In addition, the Smad signaling pathways are implicated in upregulation of CD44 protein expression by BMP-2. It was suggested that cross-talk exists between Rb and CD44 signaling pathways, as recombinant human BMP-2 (rhBMP-2) was found to regulate CD44 expression partly through Rb signals. In clinical tissues, BMP-2 was positively and negatively correlated with CD44 and Rb expression, respectively. Based on the in vitro and in vivo results, we have established an integrated mechanism by which rhBMP-2 induces EMT and stemness of breast cancer cells via the Rb and CD44 signaling pathways, which then contribute to breast cancer metastasis. These findings may be helpful for developing new strategies for the treatment and prognosis of advanced breast cancer.