The bone morphogenetic proteins (BMPs), a subgroup of the TGF-beta gene super-family, are dimeric molecules involved in the growth, differentiation and repair of a wide variety of tissues. Based on the observation that several of the BMPs co-purify when isolated from bovine bone and that a pattern of co-localization exists during mouse embryogenesis, we co-expressed various combinations of BMPs in Chinese hamster ovary cells to test for possible heterodimer formation and activity. Transient co-expression of BMP-2 with either BMP-5, BMP-6 or BMP-7, or BMP-4 transiently co-expressed with BMP-7, resulted in more BMP activity than expression of any single BMP. Stable cell lines were then made in order to purify and characterize co-expressed BMPs in more detail. Co-expression of BMP-2 with BMP-7 yielded heterodimeric BMP-2/7 with a specific activity about 20-fold higher than BMP homodimers in an in vitro alkaline phosphatase induction assay. These heterodimers were also 5- to 10-fold more potent than BMP-2 in inducing cartilage and bone in an in vivo assay. Similar results were obtained with BMP-2/6 heterodimer. These experiments demonstrate the increased potency of several BMP heterodimers relative to BMP homodimers and support the hypothesis that such heterodimeric forms are likely to have natural biological functions.