Hypoxia suppresses osteoblastic differentiation and the bone-forming capacity. As the leading osteoinductive growth factor used clinically in bone-related regenerative medicine, recombinant human bone morphogenic protein-2 (rhBMP-2) has yielded promising results in unfavorable hypoxic clinical situations. Although many studies have examined the effects of rhBMP-2 on osteoblastic differentiation, mineralization and the related signaling pathways, those of rhBMP-2 on osteoblastic cells remain unknown, particularly under hypoxic conditions. Therefore, this study was conducted under a 1% oxygen tension to examine the differentiating effects of rhBMP-2 on osteoblastic cells under hypoxia. rhBMP-2 could also induce the differentiation and mineralization of Osteoblastic (MC3T3-E1) cells under 1% hypoxic conditions. rhBMP-2 could also induce the differentiation and mineralization of MC3T3-E1 cells under 1% hypoxic conditions. rhBMP-2 increased the alkaline phosphatase {ALP} activity in a time dependent manner, and expression of ALP, collagen type-1 (Col-1) and osteocalcin (OC) mRNA were up-regulated significantly in a time- and concentration-dependent manner. In addition, the area of the mineralized nodules increased gradually in a concentration-dependent manner. Western blot analysis, which was performed to identify the signaling pathways underlying rhBMP-2-induced osteoblastic differentiation under hypoxic conditions, showed that rhBMP-2 significantly promoted the phosphorylation of the p38 mitogen-activated protein kinase (MAPK) in a time-dependent manner. A pretreatment with SB203580, a p38 MAPK inhibitor, inhibited the rhBMP-2-mediated differentiation and mineralization. Moreover, the phosphorylation of p38 induced by rhBMP-2 was inhibited in response to a pretreatment of the cells with Go6976, a protein kinase D {PKD) inhibitor. These findings suggest that rhBMP-2 induces the differentiation and mineralization of MC3T3-E1 cells under hypoxic conditions via activation of the PKD and p38 MAPK signaling pathways.