Proteolytic cleavage of precursor bone morphogenetic protein (proBMP) is an important step in generating the active mature BMP. ProBMP-2 contains two proprotein convertase (PC) recognition sites (S1 and S2) and is postulated to be cleaved by PCs at those sites. Cell lines expressing proBMP-2, with a silenced S1 site (mS1) that inhibited PC cleavage, secreted the 20-kDa form BMP-2, while cells expressing wild type (wt) BMP-2 secreted 18- and 20-kDa mature BMP-2 N-terminal isoforms. The mS1 cells secreted 15-fold more mature BMP-2 than the wt, despite their similar mRNA levels. Mutant-secreted BMP-2 demonstrated biological activity in vitro; however, its activity was reduced compared with wt. These data demonstrate that proBMP-2 can be cleaved at an alternative cleavage site without prior S1 site cleavage in cell lines overexpressing BMP-2 and more importantly suggest that the presence of the 2-kDa linker peptide can affect activity and secretion of the mature protein.