Proteoglycans have been identified within the extracellular matrices (ECM) of bone and are known to play a role in ECM assembly, mineralization, and bone formation. Bone morphogenetic protein-2 (BMP-2) specifically converts the differentiation pathway of C2C12 myoblasts into that of osteoblast lineage cells. Microarray analyses of the mouse myoblast cell line C2C12 and its differentiation into osteoblastic cells in response to BMP-2 have suggested the up-regulation of several proteoglycan species, although there is a lack of biochemical evidence for this response. In this study we have biochemically analyzed and characterized the proteoglycan populations that are induced in C2C12 cells upon osteoblastic differentiation produced by BMP-2. An important and specific increase in the synthesis of secreted decorin was observed in BMP-2-treated cells, as compared to untreated myoblasts and myoblasts induced to differentiate into myotubes. Decorin was seen to contain larger glycosaminoglycan (GAG) chains in induced than in non-induced cells. BMP-2 also produced an augment in the synthesis of different heparan sulfate proteoglycans suchsyndecan-2, -3, glypican, and perlecan in detergent-soluble and non-soluble cellular fractions. We also examined whether the evident changes induced by BMP-2 in secreted decorin could have a functional role. BMP-2 signaling dependent as well as induction of alkaline phosphatase (ALP) activity was diminished in decorin null myoblasts compared to wild type myoblats although cell surface level of BPM-2 receptors was unchanged. These results are the first biochemical evidence and analysis for the effect of BMP-2 on the synthesis of proteoglycan during osteogenic conversion of myoblasts and suggest a role for decorin in cell response to BMP-2.