Bone morphogenetic protein 2B (BMP 2B, also known as BMP 4) induces cartilage and bone morphogenesis in ectopic extraskeletal sites. BMP 2B is one of several bone morphogenetic proteins which along with activins and inhibins are members of the transforming growth factor-beta (TGF-beta) family. Both BMP 2B and activin A, but not TGF-beta 1, induce rat pheochromocytoma PC12 neuronal cell differentiation and expression of VGF, a nervous system-specific mRNA. PC12 cells exhibited approximately 2,500 receptors per cell for BMP 2B with an apparent dissociation constant of 19 pM. Extracellular matrix components, including fibronectin, laminin, and collagen type IV potentiated the activity of BMP and activin A, with the latter being the most active. Direct experiments demonstrated that radioiodinated BMP 2B bound to collagen type IV better than to either laminin or fibronectin. These data demonstrate a common neurotrophic activity of both BMP 2B and activin A, and suggest that these regulatory molecules alone and in conjunction with extracellular matrix components may play a role in both the development and repair of nervous tissue.