Bone marrow stromal cells (MSC) are the major source of osteoblasts for bone remodeling and repair in postnatal animals. Rodent MSC cultured with bone morphogenetic proteins (BMPs) differentiate into osteoblasts, but most human MSC show a poor osteogenic response to BMPs. In this study we demonstrate that BMP-induced osteogenesis in poorly responsive human MSC requires modulation of ERK and phosphatidylinositol 3-kinase (PI3-K) pathways. Either treating human MSC cultures with the MAPK/ERK kinase inhibitor PD98059 or transferring them to serum-free medium with insulin or IGF-I permits BMP-dependent increases in the expression of the early osteoblast-associated genes, alkaline phosphatase and osteopontin. Increased expression of these genes in BMP-treated, serum-free cultures correlates with increased nuclear levels of activated Smads, whereas serum-free cultures of human MSC expressing constitutively active MAPK/ERK kinase show decreased expression of early osteoblast genes and decreased nuclear translocation of BMP-activated Smads. Inhibiting ERK activity in human MSC also elevates the expression of Msx2, a transcription factor that is directly regulated by Smad-binding elements in its promoter. Therefore, growth factor stimulation leading to high levels of ERK activity in human MSC results in suppressed BMP-induced transcription of several early osteoblast genes, probably because levels of BMP-activated nuclear Smads are decreased. In contrast, inhibiting the insulin/IGF-I-activated PI3-K/AKT pathway decreases BMP-induced alkaline phosphatase and osteopontin expression in serum-free cultures of human MSC, but increases BMP activation of Smads; thus, PI3-K signaling is required for BMP-induced expression of early osteoblast genes in human MSC either downstream or independent of the BMP-activated Smad signaling pathway.