Bone morphogenetic proteins (BMPs) are secreted by skeletal cells, induce the differentiation of mesenchymal cells into cells of the osteoblastic lineage, and increase their differentiated function. BMPs also decrease collagenase-3 expression by the osteoblast. We tested the autocrine role of BMPs on collagenase-3 expression in osteoblast-enriched cells from fetal rat calvariae (Ob cells) by examining the effects of noggin, a specific inhibitor of BMP binding and function. Although collagenase-3 transcript expression declined in untreated Ob cells in culture over a 24-h period, BMP-2, -4, and -6 decreased collagenase-3 messenger RNA levels in cells treated for 2-24 h. The addition of noggin prevented the decrease of collagenase-3 transcripts in control cultures, opposed the inhibitory actions of BMP-2, and increased the levels of the protease in the culture medium. Noggin did not alter the decay of collagenase-3 messenger RNA in transcriptionally arrested cells, and it increased the levels of collagenase-3 heterogeneous nuclear RNA in Ob cells. In conclusion, noggin enhances the synthesis of collagenase-3 in osteoblasts, supporting the notion that BMPs act as autocrine suppressors of collagenase-3 in skeletal cells, an effect that may contribute to the maintenance of the bone matrix.