Bone morphogenetic proteins (BMPs) are morphogenetic signaling molecules essential for embryonic patterning. To obtain molecular insight into the influence of BMPs on morphogenesis, we searched for new genes directly activated by BMP signaling. In vitro cultured mouse embryonic stem (ES) cells were used, cultivated in chemically defined growth medium (CDM). CDM-cultured ES cells responded very selectively to stimulation by various mesoderm inducers (BMP2/4, activin A, and basic fibroblast growth factor). BMP2/4 rapidly induced transcript levels of the homeobox genes Msx-1 and Msx-2 and the proto-oncogene JunB, whereas c-jun transcripts displayed delayed albeit prolonged increase. Using differential display cDNA cloning, six direct BMP target genes were identified. These include Id3, which showed strong mRNA induction, and the moderately induced One important stage in the development of the vertebrate embryo is reached when the three germ layers are formed and the body plan gets established during the process of gastrulation (1, 2). Our understanding of the molecular mechanism mediating gastrulation is still insufficient, although over the past years many secreted growth factor-like molecules have been identified to play important roles in these early embryonic events (3). Among these signaling molecules are several members of the BMP 1 family. BMP-related growth factors belong to the TGF--superfamily and have been identified in a wide variety of organisms, ranging from insects to mammals (4). BMPs have originally been isolated for their ability to induce ectopic bone formation when injected under the skin or into the muscle of rodents (5, 6), but meanwhile many of the BMPs have been implicated in a variety of other developmental interactions, including very early embryonic inductive events. For example in Drosophila embryonic dorsal-ventral patterning is partly accomplished through the action of DPP (decapentaplegic) (7,8), which is the BMP member most closely related to mammalian BMP2 and BMP4. At the functional level these factors can substitute for one another in vertebrate and Drosophila embryos. Human BMP4 is able to rescue the dorsalventral pattern defects of dpp null mutants (9), whereas Drosophila DPP protein can induce ectopic bone in mice (10). The striking evolutionary conservation of BMP2, BMP4, and DPP suggested that these molecules play crucial roles in early vertebrate development, as is confirmed meanwhile by many studies. In Xenopus laevis BMP4 ventralizes early mesoderm (11-13) and promotes the differentiation of epidermis from ectoderm (14). Blocking BMP2/4 receptor activity in the ventral part of the embryo eliminates blood formation and dorsalizes the mesoderm (15, 16), whereas in contrast overexpression of BMP4 RNA leads to an increased expression of ventral genes and inhibits the formation of anterior structures (11,12,17). Use of a dominant-negative BMP2/4 receptor to block BMP signals in the ectoderm (18), or disaggregation of ectodermal cells (19), causes differentiation into neural ti...