Bone morphogenetic protein-2 (BMP-2) has been shown to act as an antiproliferative agent for a number of different cell types. We show that BMP-2 dose-dependently inhibits growth of MDA MB 231 human breast cancer cells. Epidermal growth factor (EGF) stimulates DNA synthesis and entry of these cells into the S-phase. BMP-2 inhibits EGF-induced DNA synthesis by arresting them in G1 phase of the cell cycle. BMP-2 increases the level of cyclin kinase inhibitor p21. Furthermore, we show that exposure of MDA MB 231 cells to BMP-2 stimulates association of pal with cyclin D1 and with cyclin E resulting in the inhibition of their associated kinase activities. Finally, BMP-2 treatment is found to cause hypophosphorylation of the retinoblastoma protein (pRb), a key regulator of cell cycle progression. Our data provide a mechanism for the antiproliferative effect of BMP-2 in the breast cancer cells.