Several homeodomain (HD) proteins are critical for skeletal patterning and respond directly to BMP2 as an early step in bone formation. RUNX2, the earliest transcription factor proven essential for commitment to osteoblastogenesis, is also expressed in response to BMP2. However, there is a gap in our knowledge of the regulatory cascade from BMP2 signaling to the onset of osteogenesis. Here we show that BMP2 induces DLX3, a homeodomain protein that activates Runx2 gene transcription. Small interfering RNA knockdown studies in osteoblasts validate that DLX3 is a potent regulator of Runx2. Furthermore in Runx2 null cells, DLX3 forced expression suffices to induce transcription of Runx2, osteocalcin, and alkaline phosphatase genes, thus defining DLX3 as an osteogenic regulator independent of RUNX2. Our studies further show regulation of the Runx2 gene by several homeodomain proteins: MSX2 and CDP/cut repress whereas DLX3 and DLX5 activate endogenous Runx2 expression and promoter activity in non-osseous cells and osteoblasts. These HD proteins exhibit distinct temporal expression profiles during osteoblast differentiation as well as selective association with Runx2 chromatin that is related to Runx2 transcriptional activity and recruitment of RNA polymerase II. Runx2 promoter mutagenesis shows that multiple HD elements control expression of Runx2 in relation to the stages of osteoblast maturation. Our studies establish mechanisms for commitment to the osteogenic lineage directly through BMP2 induction of HD proteins DLX3 and DLX5 that activate Runx2, thus delineating a transcriptional regulatory pathway mediating osteoblast differentiation. We propose that the three homeodomain proteins MSX2, DLX3, and DLX5 provide a key series of molecular switches that regulate expression of Runx2 throughout bone formation.