The formation of ectopic bone in muscle following the implantation of decalcified bone matrix led to the search and eventual discovery of bone morphogenetic proteins (BMPs) in bone matrix. The precise sequence of molecular events that underpin the cellular transformation of undifferentiated mesenchymal cells into bone has not been established, and is the subject of this study. Northern and Western blot analyses were used to examine changes in gene expression of cells treated with BMP-2 or -4. The molecules, which included BMP receptors (BMPRs), Noggin (a BMP-specific antagonist), osteocalcin (OC), Smad-4, and MyoD, were examined at messenger RNA (mRNA) and protein levels. The changes in expression of these molecules were followed in mouse muscle-derived primary culture cells, and osteoblastic or nonosteoblastic embryonic cell lines. We show the early up-regulation of BMPR-1A, -2, Noggin, OC, and Smad-4 in muscle-derived primary culture cells in a dose-dependent manner in response to BMP-2 or -4. MyoD expression was not detected after BMP stimulation. The differential expression of these positive and negative regulators of BMP signaling points to a potential regulatory mechanism for bone induction in mesenchymal cells.