Bone morphogenetic protein(s) (BMP) are very powerful cytokines that induce bone and cartilage formation. BMP also stimulate osteoblast and chondrocyte differentiation. During bone and cartilage development, BMP regulates the expression and/or the function of several transcription factors through activation of Smad signalling. Genetic studies revealed that Runx2, Osterix and Sox9, all of which function downstream of BMP, play essential roles in bone and/or cartilage development. In addition, two other transcription factors, Msx2 and Dlx5, which interact with BMP signalling, are involved in bone and cartilage development. The importance of these transcription factors in bone and cartilage development has been supported by biochemical and cell biological studies. Interestingly, BMP is regulated by several negative feedback systems that appear necessary for fine-tuning of bone and cartilage development induced by BMP. Thus, BMP harmoniously regulates bone and cartilage development by forming network with several transcription factors.