Two major isoforms of the Runx2 gene are expressed by alternative promoter usage: Runx2 type I (Runx2-I) is derived from the proximal promoter (P2), and Runx2 type II (Runx2-II) is produced by the distal promoter (P1). Our previous results indicate that Dlx5 mediates BMP-2-induced Runx2 expression and osteoblast differentiation (Lee, M.-H., Kim, Y-J., Kim, H-J., Park, H-D., Kang, A-R., Kyung, H.-M., Sung, J-H., Wozney, J. M., Kim, H-J., and Ryoo, H-M. (2003) J. Biol. Chem. 278, 34387-34394). However, little is known of the molecular mechanisms by which Dlx5 up-regulates Runx2 expression in BMP-2 signaling. Here, Runx2-II expression was found to be specifically stimulated by BMP-2 treatment or by Dlx5 overexpression. In addition, BMP-2, Dlx5, and Runx2-II were found to be expressed in osteogenic fronts and parietal bones of the developing cranial vault and Runx2-I and Msx2 in the sutural mesenchyme. Furthermore, Runx2 P1 promoter activity was strongly stimulated by Dlx5 overexpression, whereas Runx2 P2 promoter activity was not. Runx2 P1 promoter deletion analysis indicated that the Dlx5-specific response is due to sequences between -756 and -342 bp of the P1 promoter, where three Dlx5-response elements are located. Dlx5 responsiveness to these elements was confirmed by gel mobility shift assay and site-directed mutagenesis. Moreover, Msx2 specifically suppressed the Runx2 P1 promoter, and the responsible region overlaps with that recognized by Dlx5. In summary, Dlx5 specifically transactivates the Runx2 P1 promoter, and its action on the P1 promoter is antagonized by Msx2.