A protein fraction capable of eliciting cartilage or bone formation in vivo was purified more than 100,000-fold from a murine osteosarcoma (Dunn type). Intramuscular implantation of as little as 20 ng of the purified protein with 2 mg of pure skin collagen consistently induced ectopic new bone formation. The apparent molecular size of the purified protein was 32 kd on sodium dodecylsulfate-polyacrylamide gel electrophoresis. On reduction, the 32-kd protein split into subunits with the same partial amino acid sequences, and these partial sequences were identical to those of human bone morphogenetic protein-2B (BMP-4) which is assumed to be a member of the transforming growth factor-beta superfamily.