Transforming growth factor-β (TGFβ) superfamily of growth factors, which include bone morphogenetic proteins (BMPs), have multiple effects in osteoblasts. In this study, we examined the regulation of collagenase-3 promoter activity by BMP-2 in osteoblast-enriched (Ob) cells from fetal rat calvariae. BMP-2 suppressed the activity of a −2 kb collagenase-3 promoter/luciferase recombinant in a time- and dose-dependent manner. The BMP-2 effect on the collagenase-3 promoter was further tested in several collagenase-3 promoter deletion constructs and it was narrowed down to a −148 to −94 nucleotide segment of the promoter containing a runt domain factor 2 (Runx2) site at nucleotide −132 to −126. The effect of BMP-2 was obliterated in a collagenase-3 promoter/luciferase construct containing a mutated Runx2 (mRunx2) sequence indicating that the Runx2 site mediates the BMP-2 response. Electrophoretic mobility shift assays, using nuclear extracts from control and BMP-2-treated Ob cells, indicated that the Runx2 protein is a component of the specific DNA–protein complex formed on the Runx2 site and that the BMP-2 effect may be associated with minor protein modifications rather than major changes in the composition of specific proteins interacting with the Runx2 site. We confirmed that other members of the TGFβ family can down-regulate the collagenase-3 promoter by showing that TGFβ1 also suppresses the promoter activity in a time- and dose-dependent manner. In conclusion, this study demonstrates that BMP-2 and TGFβ1 suppress collagenase-3 promoter activity in osteoblasts and establishes a link between BMP-2 action and collagenase-3 expression via Runx2, a major regulator of osteoblast formation and function. © 2004 Wiley-Liss, Inc.