Induces cartilage and bone formation (PubMed: 3201241). Stimulates the differentiation of myoblasts into osteoblasts via the EIF2AK3-EIF2A- ATF4 pathway. BMP2 activation of EIF2AK3 stimulates phosphorylation of EIF2A which leads to increased expression of ATF4 which plays a central role in osteoblast differentiation. In addition stimulates TMEM119, which upregulates the expression of ATF4 (PubMed: 24362451).