The cDNAs encoding the human bone morphogenetic proteins BMP-2 and BMP-4 in an eukaryotic expression vector were permanently transferred into the murine mesenchymal progenitor cell line C3H10T½. Originally, these cells are known to differentiate into myotubes, adipocytes, and chondrocytes upon the addition of azacytidine. Permanent transfection of genes encoding human BMP-2 and BMP-4 induces differentiation into the osteogenic lineage. The osteogenic differentiation potential of C3H10T½ cells is substantiated by histochemical and genetic analyses of marker genes typical or specific for osteogenesis, including the parathyroid hormone receptor, alkaline phosphatase, osteopontin, osteonectin, and osteocalcin. In addition to osteoblast formation, development into adipocytes and chondrocytes is also observed, suggesting that BMP-2 and BMP-4 induce differentiation into three mesenchymal lineages.