Subcortical small vessel disease (SVD) is characterized by white matter damage resulting from arteriolosclerosis and chronic hypoperfusion. Transforming growth factor beta 1 (TGFB1) is dysregulated in the hereditary SVD, CARASIL (cerebral autosomal recessive arteriopathy with subcortical infarcts and leukoencephalopathy). However, very little is known about the role of the largest group in the TGFB superfamily – the bone morphogenetic proteins (BMPs) – in SVD pathogenesis. The aim of this study was to characterize signaling abnormalities of BMPs in sporadic SVD. We examined immunostaining of TGFB1 and BMPs (BMP2/BMP4/BMP6/BMP7/BMP9) in a total of 19 post‐mortem human brain samples as follows: 7 SVD patients (4 males, 76–90 years old); 6 Alzheimer's disease (AD) patients (2 males, 67–93 years old) and 6 age‐matched disease controls (3 males, 68–78 years old). We subsequently investigated the effects of oxygen–glucose deprivation and BMP4 addition on cultured cells. Furthermore, adult mice were subjected to chronic cerebral hypoperfusion using bilateral common carotid artery stenosis, followed by continuous intracerebroventricular infusion of the BMP antagonist, noggin. In the SVD cases, BMP4 was highly expressed in white matter pericytes. Oxygen–glucose deprivation induced BMP4 expression in cultured pericytes in vitro. Recombinant BMP4 increased the number of cultured endothelial cells and pericytes and converted oligodendrocyte precursor cells into astrocytes. Chronic cerebral hypoperfusion in vivo also upregulated BMP4 with concomitant white matter astrogliogenesis and reduced oligodendrocyte lineage cells, both of which were suppressed by intracerebroventricular noggin infusion. Our findings suggest ischemic white matter damage evolves in parallel with BMP4 upregulation in pericytes. BMP4 promotes angiogenesis, but induces astrogliogenesis at the expense of oligodendrocyte precursor cell proliferation and maturation, thereby aggravating white matter damage. This may explain white matter vulnerability to chronic hypoperfusion. The regulation of BMP4 signaling is a potential therapeutic strategy for treating SVD.