Bone morphogenic proteins (BMPs) are members of the TGFB growth factor superfamily with well-described functions in bone formation. Although disrupted BMP signalling in tumor development has more recently been investigated, a role for BMP3 in colorectal cancer (CRC) has remained largely unexplored. The aim of this study was to investigate BMP3 disruption in CRCs in relation to both the traditional and serrated pathways of tumor progression. BMP3 was down-regulated as assessed by real-time PCR in 50 of 56 primary tumors (89%). Bisulfite sequencing of the putative promoter revealed extensive hypermethylation in the cell line HT29, in which expression could be restored by treatment with a methyltransferase inhibitor. Aberrant hypermethylation was observed in 33/60 (55%) tumors and was highly correlated with microsatellite instability (P < 0.01), the CpG Island Methylator Phenotype (P < 0.01), BRAF oncogene mutation (P < 0.01), and proximal location (P < 0.001). Methylation was also frequently observed in serrated and traditional adenomatous polyps (22/29, 76%). Re-introduction of BMP3 into cell lines revealed marked growth suppression supporting the functional relevance of this alteration in colorectal tumor development. This study provides molecular and functional data supporting the importance of BMP3 silencing as an early and frequent event in colorectal tumors progressing via the serrated and traditional pathways.