Purpose: Bone morphogenetic protein-2(BMP-2) has been shown to possess significant osteoinducitve potential. There have been attempts to overcome a limitation of mass production, and economical efficiency of BMP. The aim of this study was to produce recombinant human BMP-2(rhBMP-2) from E. coli in a large scale and evaluate its biological activity. Materials and Methods: The E.coli strain BL21(DE3) was used as a host for rhBMP-2 production. Dimerized rhBMP-2 was purified by affinity chromatography using Heparin column. To determine the physicochemical properties of the rhBMP-2 expressed in E. coli, we examined the HPLC profile and performed Western blot analysis. The effect of the purified rhBMP-2 dimer on osteoblast differentiation was examined by alkaline phosphatase (ALP) activity and representing morphological change using C2C12 cell. Results: E. coli was genetically engineered to produce rhBMP-2 in a non-active aggregated form. We have established a method which involves refolding and purifying a folded rhBMP-2 dimer from non-active aggregates. The purified rhBMP-2 homodimer was characterized by SDS-PAGE as molecular weight of about 28kDa and eluted at 34% acetonitrile, 13.27 min(retention time) in the HPLC profile and detected at Western blot. The purified rhBMP-2 dimer stimulated ALP activity and induced the transformation from myogenic differentiation to osteogenic differentiation. Conclusion: rhBMP-2 was produced in E. coli using genetic engineering. The purified rhBMP-2 dimer stimulated ALP activity and induced the osteogenic differentiation of C2C12 cells.