In the aorta, diabetes activates an osteogenic program that includes expression of bone morphogenetic protein-2 (BMP2) and the osteoblast homeoprotein Msx2. To evaluate BMP2-Msx2 signaling in vascular calcification, we studied primary aortic myofibroblasts. These cells express vascular smooth muscle cell (VSMC) markers, respond to BMP2 by up-regulating Msx2, and undergo osteogenic differentiation with BMP2 treatment or transduction with a virus encoding Msx2. The osteoblast factor osterix (Osx) is up-regulated 10-fold by Msx2, but Runx2 mRNA is unchanged; the early osteoblast marker alkaline phosphatase increases 50-fold with mineralized nodule formation enhanced 30-fold. Adipocyte markers are concomitantly suppressed. To better understand Msx2 actions on osteogenesis versus adipogenesis, mechanistic studies were extended to C3H10T1/2 mesenchymal cells. Msx2 enhances osteogenic differentiation in synergy with BMP2. Osteogenic actions depend upon intrinsic Msx2 DNA binding; the gain-of-function variant Msx2(P148H) directs enhanced mineralization, whereas the binding-deficient variant Msx2(T147A) is inactive. Adipogenesis (lipid accumulation, Pparg expression) is inhibited by Msx2. By contrast, suppression of adipogenesis does not require Msx2 DNA binding; inhibition occurs in part via proteinprotein interactions with C/EBP␣ that control Pparg transcription. Thus, Msx2 regulates osteogenic versus adipogenic differentiation of aortic myofibroblasts. Myofibroblasts capable of both fates can be diverted to the osteogenic lineage by BMP2-Msx2 signaling and contribute to vascular calcification.Mineral deposition in the skeleton is regulated by morphogenetic, metabolic, mechanical, inflammatory, and endocrine factors. With aging, abnormalities in orthotopic (e.g. bone formation) and heterotopic arterial vascular calcification are observed with very high prevalence (1), the latter enhanced by hyperglycemia, hyperlipidemia, and chronic renal insufficiency (1, 2). At least three variants of vascular calcification have been described: (a) calcification of necrotic, intimal atherosclerotic plaques; (b) medial artery calcification; and (c) calcific sclerosis of the aortic valve. Vascular calcification is a highly significant complication of diabetes and has emerged as a powerful predictor of cardiovascular morbidity and mortality (2). The molecular mechanisms that perturb normal vascular calcium metabolism are only beginning to be understood (1, 3, 4). Demer et al. (5) was the first to show that vascular calcification may progress via molecular processes similar to osteogenesis. This group showed that the powerful bone morphogen, bone morphogenetic protein 2 (BMP2) 1 is expressed in calcified atherosclerotic plaques of humans (5). Bostrom et al. (6) further demonstrated that aortic calcification in response to matrix Gla protein deficiency was most likely via BMP2 signaling; matrix Gla protein can abrogate alkaline phosphatase (ALP) induction by inhibiting BMP2 association with the BMP receptor (6). Thus, these studies poi...