Significant progress has been made in the characterization of cartilage and bone differentiating proteins. A family of unique proteins known as bone morphogenetic proteins has been described, and there is ample evidence that they are directly responsible for de novo cartilage and bone formation in vivo. Extensive research is underway to develop appropriate and optimal delivery systems based on extracellular matrix components. It is likely that bone morphogenetic proteins will play a crucial role in bone and joint regeneration and repair.