Bone morphogenetic protein (BMP)-2, a member of the BMP family, plays an important role in osteoblast differentiation and bone formation. To discover small molecules that induce BMP-2, a luciferase reporter vector containing the 5′-flanking promoter region of the human BMP-2 gene was constructed and transfected into human osteosarcoma (HOS) cells. By the screening of an in-house natural product library with stably transfected HOS cells, a fungal metabolite, compactin, known as an inhibitor of 3-hydroxy-3-methylglutaryl coenzyme A (HMG-CoA) reductase, was isolated. The stimulation of the promoter activity by compactin seemed to be specific for BMP-2 gene in HOS cells, since it had little effect on BMP-4 or SV40 promoter activity and the stimulation was not observed in Chinese hamster ovary (CHO) cells. RT-PCR analysis and alkaline phosphatase assay revealed that compactin induced an increase in the expression of BMP-2 mRNA and protein. Like compactin, simvastatin also activated the BMP-2 promoter, whereas pravastatin did not. The statin-mediated activation of BMP-2 promoter was completely inhibited by the downstream metabolite of HMG-CoA reductase, mevalonate, indicating that the activation was a result of the inhibition of the enzyme. These results suggest that statins, if they are selectively targeted to bone, have beneficial effects in the treatment of osteoporosis or bone fracture.