Normal bone formation is a prolonged process that is carefully regulated and involves sequential expression of growth regulatory factors by osteoblasts as they proliferate and ultimately differentiate. Since this orderly sequence of gene expression by osteoblasts suggests a cascade effect, and BMP-2 is capable of initiating and maintaining this effect, we examined the effects of BMP-2 on expression of other BMPs and compared these effects with the expression pattern of bone cell differentiation marker genes in primary cultures of fetal rat calvarial (FRC) osteoblasts. To examine the gene expression profile during bone cell differentiation and bone formation, we also examined the effects of rBMP-2 on bone formation in vivo and in vitro. rBMP-2 stimulated bone formation on the periosteal surface of mice when 500 ng/day rBMP-2 was injected subctaneously. When rBMP-2 was added to primary cultures of FRC osteoblasts, it accelerated mineralized nodule formation in a time and concentration-dependent manner (10-40 ng/ml). rBMP-2 (40 ng/ml) enhanced BMP-3 and -4 mRNA expression during the mineralization phase of primary cultures of FRC osteoblasts. Enhancement of BMP-3 and -4 mRNA expression by rBMP-2 was associated with increased expression of bone cell differentiation marker genes, alkaline phosphatase (ALP), type I collagen, osteocalcin (OC), osteopontin (OP), and bone sialoprotein (BSP). These results suggest that BMP-2 enhances expression of other BMP genes during bone cell differentiation. BMP-2 may act in a paracrine fashion in concert with other BMPs it induces to stimulate bone cell differentiation and bone formation during remodeling.