One problem associated with clinical application of CHO-derived recombinant human bone morphogenetic protein (C-BMP-2) is its high cost due to the need for use of high doses. To solve this problem, Escherichia coli-derived BMP-2 (E-BMP-2) has been examined using the technique of molecular unfolding and refolding. However, it is unclear whether the characteristics of E-BMP-2 are appropriate for clinical application. In this study, we examined the biological activity of E-BMP-2 and its heat tolerance in in vitro and in vivo systems. SDS-polyacrylamide gel electrophoresis (SDS-PAGE) confirmed the high purity of E-BMP-2. E-BMP-2-induced alkaline phosphatase expression in osteoprogenitor cells (C2C12, ST2, and primary murine calvarial osteoblast cells) was dose-dependent, and consistently elicited ectopic new ossicles of significant size in mice, also in dose-dependent fashion. In addition, E-BMP-2 induced phosphorylation of Smad1/5/8 and mRNA expression of osteoblastic differentiation markers to the same extent as C-BMP-2. On the other hand, when E-BMP-2 was exposed to increasing heat over time, its bone-inducing capacity was maintained until reaching 70 degrees C for 2 h or 90 degrees C for 15 min. Thus, E-BMP-2 will exhibit a decrease in activity with the sterilization procedures required prior to use in surgery. These findings indicate that the biological capacity and heat stability of E-BMP-2 are almost equivalent to those of currently available C-BMP-2, and suggest that E-BMP-2 might, thus, solve current problems of cost impeding routine clinical use of rhBMP-2.