Small G proteins of the Rho family are pivotal regulators of several signaling networks. The Ras homolog family (Rho) and one of its targets, Rho-associated protein kinase (ROCK), participate in a wide variety of biological processes, including bone formation. A previous study has demonstrated that the ROCK inhibitor Y-27632 enhanced bone formation induced by recombinant human bone morphogenetic protein-2 (BMP-2) in vivo and in vitro. However, the effect of other Rho family members, such as Ras-related C3 botulinum toxin substrate 1 (Rac1) and cell division cycle 42 (Cdc42), on bone formation remains unknown. In this study, we investigated whether Rac1 also participates in BMP-2-induced osteogenesis. Expression of a dominant-negative mutant of Rac1 enhanced BMP-2-induced osteoblastic differentiation in C2C12 cells, whereas a constitutively active mutant of Rac1 attenuated that effect. Knockdown of T-lymphoma invasion and metastasis 1 (Tiam1), a Rac-specific guanine nucleotide exchange factor, enhanced BMP-2-induced alkaline phosphatase activity. Further, we demonstrated that BMP-2 stimulated Rac1 activity. These results indicate that the activation of Rac1 attenuates osteoblastic differentiation in C2C12 cells.