Transforming growth factor-beta (TGF-beta), one of the most abundant cytokines in bone matrix, has positive and negative effects on bone formation, although the molecular mechanisms of these effects are not fully understood. Bone morphogenetic proteins (BMPs), members of the TGF-beta superfamily, induce bone formation in vitro and in vivo. Here, we show that osteoblastic differentiation of mouse C2C12 cells was greatly enhanced by the TGF-beta type I receptor kinase inhibitor SB431542. Endogenous TGF-beta was found to be highly active, and induced expression of inhibitory Smads during the maturation phase of osteoblastic differentiation induced by BMP-4. SB431542 suppressed endogenous TGF-beta signaling and repressed the expression of inhibitory Smads during this period, possibly leading to acceleration of BMP signaling. SB431542 also induced the production of alkaline phosphatase and bone sialoprotein, and matrix mineralization of human mesenchymal stem cells. Thus, signaling cross-talk between BMP and TGF-beta pathways plays a crucial role in the regulation of osteoblastic differentiation, and TGF-beta inhibitors may be invaluable for the treatment of various bone diseases by accelerating BMP-induced osteogenesis.