Bone morphogenetic proteins (BMPs) are believed to be the most potent osteoinductive factors. However, BMPs are highly pleiotropic molecules and their supra-physiological high dose requirement leads to adverse side effects and inefficient bone formation. Thus, there is a need to develop alternative osteoinductive growth factor strategies that can effectively complement BMP activity. In this study, we intrinsically stimulated BMP signaling in adipose derived stem cells (ASCs) by downregulating noggin, a potent BMP antagonist, using an RNAi strategy. ASCs transduced with noggin shRNA significantly enhanced osteogenic differentiation of cells. The potency of endogenous BMPs was subsequently enhanced by stimulating ASCs with exogenous BMPs at a significantly reduced dose. The level of mineralization in noggin shRNA treated ASCs when treated with BMP-2 was comparable to that of control shRNA treated cell treated with 10-fold more BMP-2. The complementary strategy of noggin suppression + BMP-2 to enhance osteogenesis was further confirmed in 3D in vitro environments using scaffolds consisting of chitosan (CH), chondroitin sulfate (CS), and apatite layer on their surfaces designed to slowly release BMP-2. This finding supports the novel therapeutic potential of this complementary strategy in bone regeneration.