Bone is continuously remodeled throughout life by a tightly coupled process involving absorption by osteoclasts and formation by osteoblasts. Dysregulation of this coupled remodeling can lead to diseases such as osteoporosis (18,19). The precursors of osteoblasts are pluripotent cells known as mesenchymal stem cells (MSCs) (3,7,36). MSCs are viewed as potential tools for therapeutic intervention in diseases related to impaired function of osteoblasts because they can be derived from bone marrow, manipulated in culture, and administered back to donor individuals (12,13,24,39,40). However, the mechanistic pathways that drive differentiation of MSCs along the osteoblast lineage are not completely understood. Therefore, elucidation of molecular mechanisms underlying osteogenesis not only is important for our understanding of bone development but also may advance strategies for bone repair. Targeting therapeutic molecules to bone in order to enhance the bone-forming activity of osteoblast precursors may aid in the treatment of bone disease.Osteoinductive factors are required to drive the lineagespecific differentiation of MSCs into osteoblastic cells in culture. Osteoblast differentiation is influenced by multiple signaling pathways, including transforming growth factor 1, Hedgehog, Wnt, fibroblast growth factors, insulin-like growth factor 1, and bone morphogenetic proteins (BMPs) (8,20,25,46,49). Strategies employing BMPs have been successfully used with animals and humans to regenerate bones (16,22,27). However, the high cost and supraphysiologic doses of BMPs necessary to achieve osteoinductive activity illustrate the need for additional strategies for the stimulation of osteoblast differentiation and bone formation in vivo (23,32,48). Recent studies of zebrafish have validated the concept of employing small molecules to modulate BMP activity in vivo (50). Similarly, certain oxysterols have been shown to activate sonic hedgehog (SHH) and to stimulate osteoblastic differentiation and bone formation (1, 15). However, smallmolecule BMP stimulators that are able to bypass the need for high doses of BMP and induce bone formation remain to be identified.Here we show that the small molecule phenamil, a derivative of the diuretic amiloride, induces osteoblastic differentiation and mineralization of mouse MSCs. Phenamil and BMPs show additive effects on the expression of BMP target genes, osteogenic markers, and matrix mineralization in M2-10B4 (M2) MSCs as well as in calvarial organ cultures. We show that phenamil acts, at least in part, by inducing the expression of tribbles homolog 3 (Trb3), a previously identified positive regulator of BMP signaling (9,33,51). We further show that phenamil reduces the protein level of SMAD ubiquitin regulatory factor 1 (Smurf1) and induces expression of SMAD, the critical transcription factor in BMP signaling. These results suggest that phenamil or related small molecules may represent a novel strategy for increasing BMP activity in the clinical setting.