Distal outgrowth, maturation and remodeling of the endocardial cushion mesenchyme in the atrioventricular (AV) canal are the essential morphogenetic events during four-chambered heart formation. Mesenchymalized AV endocardial cushions give rise to the AV valves and the membranous ventricular septum (VS). Failure of these processes results in several human congenital heart defects. Despite this clinical relevance, the mechanisms governing how mesenchymalized AV endocardial cushions mature and remodel into the membranous VS and AV valves have only begun to be elucidated. The role of BMP signaling in the myocardial and secondary heart forming lineage has been well studied; however, little is known about the role of BMP2 expression in the endocardial lineage. To fill this knowledge gap, we generated Bmp2 endocardial lineage-specific conditional knockouts (referred to as Bmp2 cKOEndo) by crossing conditionally-targeted Bmp2flox/flox mice with a Cre-driver line, Nfatc1Cre, wherein Cre-mediated recombination was restricted to the endocardial cells and their mesenchymal progeny. Bmp2 cKOEndo mouse embryos did not exhibit failure or delay in the initial AV endocardial cushion formation at embryonic day (ED) 9.5–11.5; however, significant reductions in AV cushion size were detected in Bmp2 cKOEndo mouse embryos when compared to control embryos at ED13.5 and ED16.5. Moreover, deletion of Bmp2 from the endocardial lineage consistently resulted in membranous ventricular septal defects (VSDs), and mitral valve deficiencies, as evidenced by the absence of stratification of mitral valves at birth. Muscular VSDs were not found in Bmp2 cKOEndo mouse hearts. To understand the underlying morphogenetic mechanisms leading to a decrease in cushion size, cell proliferation and cell death were examined for AV endocardial cushions. Phospho-histone H3 analyses for cell proliferation and TUNEL assays for apoptotic cell death did not reveal significant differences between control and Bmp2 cKOEndo in AV endocardial cushions. However, mRNA expression of the extracellular matrix components, versican, Has2, collagen 9a1, and periostin was significantly reduced in Bmp2 cKOEndo AV cushions. Expression of transcription factors implicated in the cardiac valvulogenesis, Snail2, Twist1 and Sox9, was also significantly reduced in Bmp2 cKOEndo AV cushions. These data provide evidence that BMP2 expression in the endocardial lineage is essential for the distal outgrowth, maturation and remodeling of AV endocardial cushions into the normal membranous VS and the stratified AV valves.