TGF-β1 and BMP-2 are abundant proteins in bone matrix, their interaction in controlling osteoblastic differentiation is, however, not clearly understood. To gain more insight into the role of TGF-β1 in the control of osteoblastic differentiation, murine and human bone marrow stromal cells were transduced with an adenovirus carrying the human TGF-β1 cDNA or LacZ gene. The transduced cells assessed for alkaline phosphatase(ALP) activity, cell proliferation and matrix synthesis. The murine TGF-β1 transduced cells synthesized and secreted about 25 ng/ml of TGF-β1, while the human cells secreted about 120 ng/ml of TGF-β1 over 24h. Both the murine and human TGF-β1 transduced cells failed to respond to rhBMP-2 as indicated by non-expression of ALP activity, while the LacZ transduced cells expressed ALP activity under similar conditions. Treatment of the bone stromal cells with the human TGF-β1 protein in presence of BMP-2 demonstrated that the inhibition of the ALP activity expression is dose dependent.