Bovine bone morphogenetic protein (bBMP) induces differentiation of mesenchymal-type cells into cartilage and bone. bBMP has an apparent Mr of 18,500 +/- 500 and represents less than 0.001% of the wet weight of bone tissue. A Mr 34,000 protein resembling osteonectin is separated by extraction with Triton X-100. A Mr 24,000 protein and about half of a Mr 22,000 protein are disassociated from bBMP by precipitation in 1.5 M guanidine hydrochloride. Aggregates of bBMP and a Mr 14,000 protein are insoluble in aqueous media; the bBMP becomes soluble when the Mr 14,000 protein is disassociated in 6 M urea and removed from the solution by ultrafiltration. Three separate molecular species with apparent Mrs 18,500, 17,500, and 17,000 are eluted at 0.10, 0.15, and 0.20 M phosphate ion concentrations, respectively, from a hydroxy-apatite column. The Mr 18,500 protein has the amino acid composition of acidic polylpeptide and includes four half-cystine residues; the pI is 4.9-5.1. The Mr 22,000 component is a chromoprotein resembling ferritin. The NH2-terminal amino acid sequence of the Mr 17,500 protein simulates histone H2B. The Mr 17,000 protein may possess calmodulin activity. Aggregates of the Mr 18,500 and other proteins induce formation of large deposits of bone; the Mr 18,500 protein alone is rapidly absorbed and induces formation of small deposits. None of the other proteins induces bone formation.