One of the main factors affecting cattle fertility is pre-implantation development of the bovine embryo, which is a complex process regulated by various signal-transduction pathways. The transforming growth factor-β (TGF-β) signalling system, which is responsible for many biological processes including cell proliferation, differentiation and apoptosis, also is involved in embryo development. We hypothesized that altered expression of TGF-β genes in pre-implantation bovine embryos is associated with morphological abnormalities of these embryos. To test this hypothesis, we produced embryos in vitro and classified them at the blastocyst stage as either normally developed blastocysts or degenerates (growth-arrested embryos). The expression patterns of 25 genes from the TGF-β pathway were assessed using quantitative real time PCR. Ten genes showed differential expression between the two embryo groups, four genes displayed similar expressional profiles, and 11 genes had no detectable expression. An altered expression profile was statistically significant for 10 of the 14 expressed genes, and all were up-regulated in degenerate embryos vs. blastocysts. Furthermore, genomic association analysis of the cows from which embryos were produced revealed a significant association of ID3 and BMP4 polymorphisms—two of the most significant differentially expressed genes—with fertilization rate and blastocyst rate, respectively. Taken together, we conclude that TGF-β pathway genes, especially BMP4 and ID3 play a vital function in the regulation of pre-implantation embryo development at both embryo and maternal levels. Hence, these genes may be suitable as genetic markers for embryo development and fertility in cattle.