Systemically administered fibroblast growth factors (FGFs) show anabolic effects on bone formation in animals, whereas in vitro cell culture studies have demonstrated that FGFs block mineralized bone nodule formation. These apparently contradictory outcomes indicate that the nature of FGF action is complex and that the biological effect of FGFs may depend on the differentiation stage of osteoblasts, interaction with other cytokines, or the length and mode of exposure to factors. Thus, we have utilized primary calvarial bone cell populations at different maturation phases to determine their responses to 2, FGF-9, and BMP-2, the factors expressed in bone. FGF-2 and FGF-9 stimulated proliferation of the cell populations consisting of more mature osteoblasts, but not those with undifferentiated precursor cells. Continuous treatment with FGF-2/-9 inhibited expression of several osteoblast marker genes and mineralization. However, brief pretreatment with FGF-2/-9 or sequential treatment with FGF-2/-9 followed by BMP-2 led to marked stimulation of mineralization, suggesting that FGFs enhance the intrinsic osteogenic potential. Furthermore, FGF-2 and FGF-9 increased expression of other osteogenic factors BMP-2 and TGFbeta-1. Meanwhile, blocking endogenous FGF signaling, using a virally transduced dominant-negative FGF receptor (FgfR), resulted in drastically reduced expression of the BMP-2 gene, demonstrating for the first time that endogenous FGF/FgfR signaling is a positive upstream regulator of the BMP-2 gene in calvarial osteoblasts. In contrast, expression of a BMP antagonist noggin was inhibited by FGF-2 and FGF-9. Thus, collective data from this study suggest that FGF/FgfR signaling enhances the intrinsic osteogenic potential by selectively expanding committed osteogenic cell populations as well as inversely regulating BMP-2 and noggin gene expression.