The signaling pathways of bone morphogenic protein 2 (BMP-2) and Sonic hedgehog (Shh) are related during embryogenesis. Both proteins have been implicated as important components during osteogenic differentiation; e.g., considering their in vitro effects in the pluripotent C3H10T/1/2 cell system. Also, BMP-2 has been frequently reported to stimulate adipogenesis as well as osteogenesis in these cells. We investigated the relative potencies of Shh and BMP-2 with regard to adipogenesis. We performed differentiation experiments by stimulating C3H10T1/2 cells with BMP-2, Shh, or a combination. We monitored adipocyte-like differentiation via gene expression analysis and cytologic staining. An adipocytic phenotype was observed in BMP-2-treated cells, as shown by upregulation of two adipocytic marker mRNAs, PPAR-gamma and aP2, and by staining of lipid-filled cell vesicles with Oil Red O. In contrast, no adipocyte-like differentiation could be detected either after treatment with Shh or after exposure to a combination of Shh and BMP-2. Our results demonstrate for the first time that Shh and BMP-2 have contrary effects on adipocyte-like differentiation. Whereas BMP-2 promotes the adipocytic lineage, Shh suppresses the expression of the BMP-2-induced fat-cell phenotype.