The long term goal of the proposed studies is to understand how maturation of bone morphogenetic proteins (BMPs) regulates their bioactivity during embryogenesis and bone healing. BMPs are generated as latent precursors, which are proteolytically activated by members of the proprotein convertase (PC) family. We have shown that proBMP4 is sequentially cleaved at two sites during maturation: initially at a site adjacent to the mature domain and then at an upstream site within the prodomain. Cleavage at the second site determines whether the prodomain remains complexed with the mature domain or not. This, in turn, regulates the activity and signaling range of BMP4 by directing its endosomal trafficking to either degradatory or secretory/recycling pathways. By contrast, proBMP7 is cleaved at a single site to generate a stable prodomain/mature ligand complex that is targeted to the extracellular matrix. When BMP4 and BMP7 are co-expressed in vivo, they preferentially form heterodimers that show a higher specific activity than do homodimers of either subunit. Our preliminary data support the hypothesis that this difference in bioactivity is conferred during the process of proprotein maturation. To further test this hypothesis, and to examine potential mechanisms by which maturation influences heterodimer activity, we will complete the following aims: First, we will determine which sites are cleaved in heterodimers, and by what enzymes, by comparing proteolytic maturation of proBMP4 and proBMP7 homodimers and heterodimers in Xenopus oocytes and embryos, and in oocytes depleted of specific PCs. Second, we will test the hypothesis that heterodimeric prodomains are required to generate a more active ligand by comparing the activity and signaling range of heterodimers cleaved from precursors with homologous or heterologous prodomains in Xenopus embryos. Finally, to examine the role of heterodimers containing endogenous BMP7 in vertebrate development, we will generate mice carrying a targeted mutation that blocks cleavage of BMP7 and ask whether these mice have more severe phenotypic defects, and lower BMP activity, than do BMP7 null mutants. Understanding how heterodimeric BMPs acquire enhanced bioactivity will aid our understanding of birth defects caused by misregulation of this pathway and may lead to more effective therapies for bone injuries and disease. Project Narrative BMPs plays central roles during embryogenesis and are used clinically to stimulate bone regeneration, although their use is limited by the low specific activity of homodimers in vivo. The proposed studies will improve our understanding of how heterodimers of BMP4 and BMP7 acquire enhanced bioactivity This is important for identifying, treating and preventing congenital anomalies and may lead to more effective therapies for the treatment of bone injury and disease in adults.