Bone morphogenetic protein (BMP) stimulates mesenchymal cells to differentiate, resulting in de novo endochondral ossification in vivo. The response of fibrocartilage and periosteal cells from human and canine nonunion tissues to partially purified BMP was examined in culture. Cells derived from neonatal rat muscle explants were used for comparison. Alkaline phosphatase activity and expression of alkaline phosphatase and Types I and II collagen mRNAs were compared to that of rat chondrocytes. Synthesis of Type II collagen by the muscle cells was verified by enzyme-linked immunosorbent assay (ELISA). Addition of BMP to the muscle cell and nonunion cell cultures resulted in a dose-dependent decrease in cell number. There was a decrease in matrix vesicle and plasma membrane alkaline phosphatase activity concomitant with an increase in mRNA levels for alkaline phosphatase and collagen genes. Synthesis of immunoreactive Type II collagen increased. These data indicate that neonatal rat muscle cells and nonunion cells may respond in a similar fashion to BMP. Bone morphogenetic protein stimulated hyaluronic acid synthesis at three days, but chondroitin sulfate synthesis did not increase until ten days exposure to BMP. These data, together with those summarized above, suggest that more than three days may be required for complete expression of the chondrocyte phenotype typical of endochondral ossification.