Vascular remodeling to match arterial diameter to tissue requirements commonly fails in ischemic disease. Endothelial cells sense fluid shear stress (FSS) from blood flow to maintain FSS within a narrow range in healthy vessels. Thus, high FSS induces vessel outward remodeling, but mechanisms are poorly understood. We previously reported that Smad1/5 is maximally activated at physiological FSS. Smad1/5 limits Akt activation, suggesting that inhibiting Smad1/5 may facilitate outward remodeling. Here we report that high FSS suppresses Smad1/5 by elevating KLF2, which induces the bone morphogenetic protein (BMP) pathway inhibitor, BMP-binding endothelial regulator (BMPER), thereby de-inhibiting Akt. In mice, surgically induced high FSS elevated BMPER expression, inactivated Smad1/5 and induced vessel outward remodeling. Endothelial BMPER deletion impaired blood flow recovery and vascular remodeling. Blocking endothelial cell Smad1/5 activation with BMP9/10 blocking antibodies improved vascular remodeling in mouse models of type 1 and type 2 diabetes. Suppression of Smad1/5 is thus a potential therapeutic approach for ischemic disease.