Bone morphogenetic proteins (BMPs) and transforming growth factor-beta (TGFbeta) are potent regulators of osteoblast differentiation and proliferation, processes that are crucial in bone remodeling. BMPs and TGFbeta act in concert with other local factors and hormones, among them 1,25(OH)2-vitamin D3 and insulin. Here we show that BMP7 inhibits 1,25(OH)2-vitamin D3-induced differentiation of human osteoblasts, whereas TGFbeta1 stimulates it, as assessed by assays for alkaline phosphatase (ALP) induction, matrix mineralization, and morphology changes. BMP7 or TGFbeta1 alone affects the differentiation of human osteoblasts. Similar results were obtained in assays for ALP induction using conditionally immortalized human osteoblasts (hFOB) and primary osteoblasts obtained from trabecular bone of the femoral head after hip replacement surgery. BMP7 stimulation led to a decrease of 1,25(OH)2-vitamin D3-induced binding of nuclear proteins to a vitamin D response element, as shown by electrophoretic mobility shift assay. Our results suggest that 1,25(OH)2-vitamin D3 modulates in opposite ways the effects of BMP7 and TGFbeta1 on osteoblast differentiation.