C3H10T1/2 cells are an established mesenchymal stem cell line which can differentiate into muscle, fat and cartilage cells when treated with azacytidine. Bone morphogenetic protein-2 (BMP-2) caused a dose dependent differentiation of these cells into fat, cartilage and bone cells-low concentrations favoring adipocytes and high concentrations chondrocytes and osteoblasts. The differentiated phenotypes were stable in the absence of BMP-2. Furthermore, the addition of other growth factors during the differentiation process altered the frequency of the differentiated colony formation. Transfection of the C3H10T1/2 cells with a BMP-2 cDNA also induced a phenotypic change from the parental fibroblast to adipocytes and osteoblasts. Our results in this model system indicate that a single protein factor can cause differentiation of a stem cell line to multiple phenotypes, that phenotypes induced can be regulated by factor concentration, and that other factors can also influence BMP-2 induced differentiation.