How mechanotransduction intersects with chemical and transcriptional factors to shape organogenesis is an important question in developmental biology. This is particularly relevant to the cardiovascular system, which uses mechanical signals from flowing blood to stimulate cytoskeletal and transcriptional responses that form a highly efficient vascular network. Using this system, artery size and structure are tightly regulated, but the underlying mechanisms are poorly understood. Here, we demonstrate that deletion of Smad4 increased the diameter of coronary arteries during mouse embryonic development, a phenotype that followed the initiation of blood flow. At the same time, the BMP signal transducers SMAD1/5/8 were activated in developing coronary arteries. In a culture model of blood flow-induced shear stress, human coronary artery endothelial cells failed to align when either BMPs were inhibited or SMAD4 was depleted. In contrast to control cells, SMAD4-deficient cells did not migrate against the direction of shear stress and increased proliferation rates specifically under flow. Similar alterations were seen in coronary arteries in vivo. Thus, endothelial cells perceive the direction of blood flow and respond through SMAD signaling to regulate artery size.