The effects of recombinant human bone morphogenetic protein 2 (rhBMP-2) on osteochondrogenesis were examined in high-density cultures of periosteum-derived cells, which have the potential to differentiate into bone and hypertrophic cartilage in vitro. Proliferation of these cells was inhibited by treatment with rhBMP-2. The time course for alkaline phosphatase (ALP) expression was shortened and the mineralization of the culture was increased by supplementation with rhBMP-2. These stimulatory effects of rhBMP-2 were observed at doses of 10–100 ng/m. Bone Gla protein (BGP) was immunocytochemically detectable earlier in the culture treated with rhBMP-2, and the BGP-positive layer of the rhBMP-2-treated cultures was thicker than that of the control cultures. On the other hand, there was no difference in uronic acid content or the time course of α1 (II) collagen mRNA expression between the rhBMP-2-treated and the control cultures. These results indicate that rhBMP-2 shortens the time course of osteogenesis and increases the amount of bone formation, whereas chondrogenesis remains unaffected.