Development and repair of the skeletal system and other organs is highly dependent on precise regulation of bone morphogenetic proteins (BMPs), their receptors, and their intracellular signaling proteins known as Smads. The use of BMPs clinically to induce bone formation has been limited in part by the requirement of much higher doses of recombinant proteins in primates than were needed in cell culture or rodents. Therefore, control of cellular responsiveness to BMPs is now a critical area that is poorly understood. We determined that LMP-1, a LIM domain protein capable of inducing de novo bone formation, interacts with Smurf1 (Smad ubiquitin regulatory factor 1) and prevents ubiquitination of Smads. In the region of LMP responsible for bone formation, there is a motif that directly interacts with the Smurf1 WW2 domain and can effectively compete with Smad1 and Smad5 for binding. We have shown that small peptides containing this motif can mimic the ability to block Smurf1 from binding Smads. This novel interaction of LMP-1 with the WW2 domain of Smurf1 to block Smad binding results in increased cellular responsiveness to exogenous BMP and demonstrates a novel regulatory mechanism for the BMP signaling pathway.Bone morphogenetic proteins are critical regulators of osteoblast differentiation and bone formation (1). BMPs 2 were originally identified as molecules that could induce ectopic bone and cartilage formation in rodents (2). Subsequently, various members of the BMP family have been shown to play a role in development of limb bud patterning, kidney, germ cells, nervous system elements, tendons/ligaments, and control of apoptosis (3). Several members of the BMP family are osteoinductive and able to induce the differentiation of mesenchymal cells into osteoblasts (4). The various activities of the BMPs are modulated through the control of antagonists, cell surface receptors, intracellular signaling proteins (Smads), and cross-talk with other signaling pathways (5, 6). Clinically, rhBMP-2 is being used to achieve spine fusion in patients with low back pain and avoids the morbidity of bone harvested from the pelvis (7,8). Unfortunately, without improving the responsiveness to BMP-2, the high doses (milligrams) required in humans and the resultant cost are prohibitive for routine clinical use (9).BMP responsiveness is dependent in part on the availability of intracellular signaling proteins. When activated, the type I BMP receptors phosphorylate intracellular mediators, the Smad proteins (10). The receptor-regulated Smads (R-Smads) are phosphorylated by the type I receptors upon ligand binding (11). Smad2 and Smad3 are involved in the TGF-/activin pathway, whereas Smads 1, 5, and 8 act in response to BMPs (12). The phosphorylated R-Smads interact with the single common Smad, Smad4, forming a complex that translocates into the nucleus, associates with DNA, and is responsible for transcriptional regulation of target genes (13).To examine strategies for improving cellular responsiveness to BMPs, we chose to study hu...