Drosophila Crossveinless-2 (dCV-2) is required for local activation of Mad phosphorylation in the fruit fly wing and has been postulated to be a positive regulator of BMP-mediated signaling. In contrast, the presence of 5 Chordin-like cysteine-rich domains in the CV-2 protein suggests that CV-2 belongs to a family of well-established inhibitors of BMP function that includes Chordin and Sog [Development 127 (2000) 3947]. We have identified a human homolog of Drosophila CV-2 (hCV-2). Here we show that purified recombinant hCV-2 protein inhibits BMP-2 and BMP-4 dependent osteogenic differentiation of W-20-17 cells, as well as BMP dependent chondrogenic differentiation of ATDC5 cells. Interestingly, hCV-2 messenger RNA is expressed at high levels in human primary chondrocytes, whereas expression in primary human osteoblasts is low. These results suggest that hCV-2 may regulate BMP responsiveness of osteoblasts and chondrocytes in vivo. Taken together we have shown that contrary to the function predicted from the fruit fly, Crossveinless-2 is a novel inhibitor of BMP function.