Previous work in this laboratory has shown that endoderm cells in the heart forming region (HFR endoderm) of the chicken embryo induce terminal cardiac differentiation in explanted precardiac mesoderm cells. Immunostaining patterns indicating that HFR endoderm cells express Drosophila decapentaplegic (dpp)-like antigens prompted a degenerate polymerase chain reaction (PCR) screen to identify cDNAs in the dpp subgroup of the transforming growth factor-beta (TGF-beta) family. Among 50 clones of PCR products that have been sequenced, over half have identity with bone morphogenetic protein-2 (BMP-2). No other TGF-beta cDNAs have been detected, suggesting that BMP-2 is the major dpp subgroup protein synthesized by HFR endoderm cells. However, BMP-2 protein did not promote survival of either precardiac or non-precardiac mesoderm cells in culture. Whereas FGF-4 supports cardiogenesis in precardiac mesoderm, it did not induce cardiogenesis in nonprecardiac mesoderm, although explant viability was maintained. In contrast to the isolated effects of these growth factors, treatment of non-precardiac mesoderm with combined BMP-2 and FGF-4 induced cardiogenesis in the majority of explants, as revealed by the formation of a rhythmically contractile multicellular vesicle that expresses sarcomeric alpha-actin. These findings suggest that BMP-2 and FGF-4 possess respective differentiative and proliferative activities, the combination of which specifies cells to the cardiac lineage.