Bone morphogenetic proteins (BMPs) induce the differentiation of cells of the osteoblastic lineage and enhance the function of the osteoblast. Growth factors are regulated by binding proteins, but there is no information about binding proteins for BMPs in skeletal cells. Noggin specifically binds BMPs, but its expression by cells of the osteoblastic lineage has not been reported. We tested for the expression of noggin and its induction by BMP-2 in cultures of osteoblast-enriched cells from 22-d-old fetal rat calvariae (Ob cells). BMP-2 caused a time- and dose-dependent increase in noggin mRNA and polypeptide levels, as determined by Northern and Western blot analyses. The effects of BMP-2 on noggin transcripts were dependent on protein, but independent of DNA synthesis. BMP-2 increased the rates of noggin transcription as determined by nuclear run-on assays. BMP-4, BMP-6, and TGF-beta1 increased noggin mRNA in Ob cells, but basic fibroblast growth factor, platelet- derived growth factor BB, and IGF-I did not. Noggin decreased the stimulatory effects of BMPs on DNA and collagen synthesis and alkaline phosphatase activity in Ob cells. In conclusion, BMPs induce noggin transcription in Ob cells, a probable mechanism to limit BMP action in osteoblasts.