Metastatic disease is the major cause of cancer deaths, and recurrent tumors at distant organs are a critical issue. However, how metastatic tumor cells become dormant and how and why tumors recur in target organs are not well understood. In this study, we demonstrate that BMP7 (bone morphogenetic protein 7) secreted from bone stromal cells induces senescence in prostate cancer stem-like cells (CSCs) by activating p38 mitogen-activated protein kinase and increasing expression of the cell cycle inhibitor, p21, and the metastasis suppressor gene, NDRG1 (N-myc downstream-regulated gene 1). This effect of BMP7 depended on BMPR2 (BMP receptor 2), and BMPR2 expression inversely correlated with recurrence and bone metastasis in prostate cancer patients. Importantly, this BMP7-induced senescence in CSCs was reversible upon withdrawal of BMP7. Furthermore, treatment of mice with BMP7 significantly suppressed the growth of CSCs in bone, whereas the withdrawal of BMP7 restarted growth of these cells. These results suggest that the BMP7–BMPR2–p38–NDRG1 axis plays a critical role in dormancy and recurrence of prostate CSCs in bone and suggest a potential therapeutic utility of BMP7 for recurrent metastatic disease.