The biologic effects of recombinant human bone morphogenetic protein-2b (BMP-2b = BMP-4) were studied and compared with transforming growth factor-beta 1 (TGF-beta 1) in fetal rat osteoblast-like (ROB) cells. Similar to the effects of TGF-beta 1, BMP-2b stimulated DNA and collagen synthesis as well as protein accumulation. Unlike TGF-beta 1, which inhibited alkaline phosphatase activity, BMP-2b enhanced enzyme activity eight-to ninefold over the control level. The present study demonstrates direct actions of BMP-2b on bone-associated cells to stimulate osteogenic phenotypes in vitro and provides a cellular mechanism for the induction of bone formation by BMP-2b in vivo.