We have examined the effects of BMP-2 on the expression of bone matrix proteins in both human bone marrow stromal cells (HBMSC) and human osteoblasts (HOB) and their proliferation and mineralization. Both HBMSC and HOB express BMP-2/-4 type I and type II receptors. Treatment of these two cell types with BMP-2 for 4 weeks in the presence of β-glycerophosphate and ascorbic acid results in mineralization of their matrix. BMP-2 increases the mRNA level and activities of alkaline phosphatase and elevates the mRNA levels and protein synthesis of osteopontin, bone sialoprotein, osteocalcin, and α1(I) collagen in both cell types. Whereas the mRNA level of decorin is increased, the mRNA concentration of biglycan is not altered by BMP-2. No effect on osteonectin is observed. The effect of BMP-2 on bone matrix protein expression is dose dependent from 25 to 100 ng/ml and is evident after 1–7 days treatment. In the presence of BMP-2, proliferation of HBMSC and HOB is decreased under either serum-free condition or in the presence of serum. Thus, BMP-2 has profound effects on the proliferation, expression of most of the bone matrix proteins and the mineralization of both relatively immature human bone marrow stromal preosteoblasts and mature human osteoblasts. J. Cell. Biochem. 67:386–398, 1997. © 1997 Wiley-Liss, Inc.