Iron delivery to the plasma is closely coupled to erythropoiesis, the production of red blood cells, as this process consumes most of the circulating plasma iron. In response to hemorrhage and other erythropoietic stresses, increased erythropoietin stimulates the production of the hormone erythroferrone (ERFE) by erythrocyte precursors (erythroblasts) developing in erythropoietic tissues. ERFE acts on the liver to inhibit bone morphogenetic protein (BMP) signaling and thereby decrease hepcidin production. Decreased circulating hepcidin concentrations then allow the release of iron from stores and increase iron absorption from the diet. Guided by evolutionary analysis and Alphafold2 protein complex modeling, we used targeted ERFE mutations, deletions, and synthetic ERFE segments together with cell-based bioassays and surface plasmon resonance to probe the structural features required for bioactivity and BMP binding. We define the ERFE active domain and multiple structural features that act together to entrap BMP ligands. In particular, the hydrophobic helical segment 81 to 86 and specifically the highly conserved tryptophan W82 in the N-terminal region are essential for ERFE bioactivity and Alphafold2 modeling places W82 between two tryptophans in its ligands BMP2, BMP6, and the BMP2/6 heterodimer, an interaction similar to those that bind BMPs to their cognate receptors. Finally, we identify the cationic region 96-107 and the globular TNFα-like domain 186-354 as structural determinants of ERFE multimerization that increase the avidity of ERFE for BMP ligands. Collectively, our results provide further insight into the ERFE-mediated inhibition of BMP signaling in response to erythropoietic stress.