In medicine, N-methyl pyrrolidone (NMP) has a long track record as a constituent in medical devices approved by the Food and Drug Administration and thus can be considered as a safe and biologically inactive small chemical. In the present study, we report on the newly discovered pharmaceutical property of NMP in enhancing bone regeneration in a rabbit calvarial defect model in vivo. At the cellular level, the pharmaceutical effect of NMP was confirmed, in particular, in combination with bone morphogenetic protein (BMP)-2, because NMP increased early and late markers for maturation of preosteoblasts and human bone marrow-derived stem cells in vitro. When we used the multipotent cell line C2C12 without autologous BMP expression, NMP alone had no effect on alkaline phosphatase activity, a marker for osteogenic transdifferentiation. Nevertheless, in combination with low BMP-2 doses, alkaline phosphatase activity was more than eight times as great. Thus, the pharmaceutical NMP mode of action is that of an enhancer of BMP activity. The dependency of the effects of NMP on BMP was confirmed in preosteoblasts because noggin, an extracellular BMP inhibitor, suppressed NMP-induced increases in early markers for osteoblast maturation in vitro. At the molecular level, NMP was shown to have no effect on the binding of BMP-2 to the ectodomain of the high-affinity BMP receptor IA. However, NMP further increased the phosphorylation of p38 and Smad1,5,8 induced by BMP-2. Thus, the small chemical NMP enhances BMP activity by increasing the kinase activity of the BMP receptor complex for Smad1,5,8 and p38 and could be employed as a potent drug for bone tissue regeneration and engineering.