Recombinant baculoviruses as expression vectors for Xenopus bone morphogenetic protein (xBMP)-2, 4 and 7 were generated. The conditioned medium of insect cells infected with the virus for xBMP-2 or 4 showed strong alkaline phosphatase-inducing activity in a mouse osteoblastic cell line, MC3T3-E1, although a large portion of the activity remained in the infected cells. In contrast, xBMP-7 was preferentially secreted into the medium, but had only weak activity. Conditioned media following simultaneous inoculation with the viruses for xBMP-7 and for xBMP-2 or 4 showed a remarkably increased level of activity. The increased activity was clearly separated from other peaks derived from single infection on a cation-exchange column and was found to arise from the disulfide-linked heterodimer consisting of xBMP-4 and 7 subunits by immunoblot analysis. The heterodimer also augmented osteocalcin production and parathyroid hormone-sensitivity more strongly than the homodimers. These results suggest that our expression system provides a convenient source of heterodimeric BMP with high osteogenic differentiation-inducing activity.