Bone morphogenetic protein (BMP) 2, a member of the transforming growth factor (TGF) beta family, is a potent regulator of osteoblast differentiation. In addition, both TGF-beta and activin A can either induce bone formation or inhibit bone formation depending on cell type and differentiation status. Although much is known about the receptors and intracellular second messengers involved in the action of TGF-beta family members, little is known about how selectivity in the biological response of individual family members is controlled. In this study, we have investigated selective gene induction by BMP-2, TGF-beta1 and activin A in relation to their ability to control differentiation of mouse mesenchymal precursor cells C2C12 into osteoblastic cells. TGF-beta1 can inhibit BMP-2-induced differentiation of these cells, whereas activin A was found to be without morphogenetic effect. Using a gene expression microarray approach covering 8636 sequences, we have identified a total of 57 established genes and expressed sequence tags (ESTs) that were either up-regulated or down-regulated 2 h after treatment with at least one of these three stimuli. With respect to the established genes, 15 new target genes for TGF-beta family members thus were identified. Furthermore, a set of transcripts was identified, which was oppositely regulated by TGF-beta1 and BMP-2. Based on the inverse biological effects of TGF-beta1 and BMP-2 on C2C12 cells, these genes are important candidates for controlling the process of growth factor-induced osteoblast differentiation.