Bone morphogenetic protein 2 (BMP-2) plays a decisive role during bone regeneration and repair as well as during various stages of embryonal development. A cDNA encoding mature human BMP-2 could be efficiently expressed in Esclzerichia coli, and after renaturation a dimeric BMP-2 protein of M , 26000 was prepared with a purity greater 98 %. The recombinant BMP-2 was functionally active as demonstrated by the induction of alkaline phosphatase activity in the C3HlOT1/2 fibroblast cell line (EC,, of 70 nM) and proteoglycan synthesis in embryonic chicken limb bud cells (EC,,(15)(16)(17)(18)(19)(20). A peptide 1-17 representing the N-terminal basic part of BMP-2 as well as heparin increased the specific activity of the protein about fivefold in the limb bud assay. These observations suggested that the N-termini reduce the specific activity of BMP-2, probably by interacting with heparinic sites in the extracellular matrix. This conclusion was supported by a variant EHBMP-2, where the N-terminal residues 1-12 of BMP-2 had been substituted by a dummy sequence of equal length and which showed an EC,, value of around 1 nM which was affected neither by heparin nor by peptide 1 -17. A physical interaction between BMP-2 and heparin could be seen in biosensor experiments, where BMP-2 bound to immobilized heparin with a dissociation constant, Kd, of approximately 20 nM, whereas the heparin-binding of variant EHBMP-2 was negligible. These results identify the basic N-terminal domains of dimeric BMP-2 as heparin-binding sites that are not obligatory for receptor activation but modulate its biological activity.Keywords: human bone morphogenetic protein ; bacterial expression ; heparin binding; limb bud; proteoglycan synthesis ; variant bone morphogenetic protein 2.Bone morphogenetic protein 2 (BMP-2) is one of the proteins originally identified as factors extractable from bone and triggering ectopic bone formation at non-skeletal sites in vivo (Urist, 1965;Sampath and Reddi, 1981;Urist et al., 1982; for review see Wozney, 1992;Rosen and Thies, 1992;Reddi, 1994). After cloning and expression in Chinese hamster ovary (CHO) cells Wang et al., 1990) purified BMP-2 has been established to induce de novo bone formation and bone repair in adult animals (see, for example, Toriumi et al., 1991), and chondrogenic and osteogenic differentiation in various cellular systems in vitro. In addition, BMP-2 regulates, similarly to its nearest homologue BMP-4, diverse fundamental processes during embryonic development (see, for example, Kingsley, 1994). The mature BMP-2 protein is closely related to the Drosophila dpp protein (Padgett et al., 1993) and the Xenopus BMP-2 (Plessow et al., 1991). The human BMP-2 can substitute the Drosophila homologue dpp during dorsalventral patterning, and, vice versa, a recombinant dpp protein induces ectopic bone formation in rats (Padgett et al., 1993;Sampath et al., 1993). BMP-2 and the other BMP have great potential for medical therapeutic applications, in particular beCorrespondence to W. Sebald, Physiologisc...