Bone morphogenetic proteins (BMPs) induce ectopic bone formation in muscle tissue in vivo and convert myoblasts such that they differentiate into osteoblastic cells in vitro. We report here that constitutively active Smad1 induced osteoblastic differentiation of C2C12 myoblasts in cooperation with Smad4 or Runx2. In floxed Smad4 mice-derived cells, Smad4 ablation partially suppressed BMP-4-induced osteoblast differentiation. In contrast, the BMP-4-induced inhibition of myogenesis was lost by Smad4 ablation and restored by Smad4 overexpression. A nuclear zinc finger protein, E4F1, was identified as a possible component of the Smad4 complex that suppresses myogenic differentiation in response to BMP signaling. In the presence of Smad4, E4F1 stimulated the expression of Ids. Taken together, these findings suggest that the Smad signaling pathway may play a dual role in the BMP-induced conversion of myoblasts to osteoblastic cells.