Ongoing efforts to search for bioactive substances for bone diseases have led to the discovery of natural products with substantial bioactive properties. In this present study, an osteoblast activating-peptide was isolated from biodiesel by-products of microalgae, Nannochloropsis oculata. To utilize biodiesel by-products of N. oculata and evaluate their beneficial effects, enzymatic hydrolysis was carried out using commercial enzymes such as alcalase, flavourzyme, neutrase, trypsin (PTN (TM)), protamex and alcalase hydrolysate exhibited the highest osteoblastic differentiation activity. Using consecutive purification by liquid chromatographic techniques, an osteoblast-differentiatory peptide was purified and identified to be a peptide (MPDW, 529.2 Da) by the tandem MS analysis. The results showed that purified peptide promotes osteoblast differentiation by increasing expression of several osteoblast phenotype markers such as alkaline phosphatase (ALP), osteocalcin, collagen type I, BMP-2, BMP2/4 and bone mineralization in both human osteoblastic cell (MG-63) and murine mesenchymal stem cell (D1). In addition, the purified peptide induced phosphorylation of MAPK and Smad pathway in both cells. These results suggest that peptide possesses positive effects on osteoblast differentiation and may provide possibility for treating bone diseases. (C) 2013 Elsevier Ltd. All rights reserved.