Bone morphogenetic protein-2 (BMP-2) is currently the only Food and Drug Administration (FDA)-approved osteoinductive growth factor used as a bone graft substitute. However, with increasing clinical use of BMP-2, a growing and well-documented side effect profile has emerged. This includes postoperative inflammation and associated adverse effects, ectopic bone formation, osteoclast-mediated bone resorption, and inappropriate adipogenesis. Several large-scale studies have confirmed the relative frequency of adverse events associated with the clinical use of BMP-2, including life-threatening cervical spine swelling. In fact, the FDA has issued a warning of the potential life-threatening complications of BMP-2. This review summarizes the known adverse effects of BMP-2, including controversial areas such as tumorigenesis. Next, select animal models that replicate BMP-2's adverse clinical effects are discussed. Finally, potential molecules to mitigate the adverse effects of BMP-2 are reviewed. In summary, BMP-2 is a potent osteoinductive cytokine that has indeed revolutionized the bone graft substitute market; however, it simultaneously has accrued a worrisome side effect profile. Better understanding of these adverse effects among both translational scientists and clinicians will help determine the most appropriate and safe use of BMP-2 in the clinical setting.