OBJECTIVE: To clarify the mechanisms of the signal transduction of bone morphogenetic proteins (BMPs) inducing bone formation and to provide theoretical basis for basic and applying research of BMPs. METHOD: We looked up the literature of the role of Smads and related transcription factors in the signal transduction of BMPs inducing bone formation. RESULTS: The signal transduction processes of BMPs included: 1. BMPs combined with type II and type I receptors; 2. the type I receptor phosphorylated Smads; and 3. Smads entered the cell nucleus, interacted with transcription factors and influenced the transcription of related proteins. Smads could be divided into receptor-regulated Smads (R-Smads: Smad1, Smad2, Smad3, Smad5, Smad8 and Smad9), common-mediator Smad (co-Smad: Smad4), and inhibitory Smads (I-Smads: Smad6 and Smad7). Smad1, Smad5, Smad8, and probable Smad9 were involved in the signal transduction of BMPs. Multiple kinases, such as focal adhesion kinase (FAK), Ras-extracellular signal-regulated kinase (ERK), phosphatidylinositol 3-kinase (PI3K), and Akt serine/threonine kinase were related to Smads signal transduction. Smad1 and Smad5 related with transcription factors included core binding factor A1 (CBFA1), smad-interacting protein 1 (SIP1), ornithine decarboxylase antizyme (OAZ), activating protein-1 (AP-1), xenopus ventralizing homeobox protein-2 (Xvent-2), sandostatin (Ski), antiproliferative proteins (Tob), and homeodomain-containing transcriptian factor-8 (Hoxc-8), et al. CBFA1 could interact with Smad1, Smad2, Smad3, and Smad5, so it was involved in TGF-beta and BMP-2 signal transduction, and played an important role in the bone formation. Cleidocranial dysplasia (CCD) was thought to be caused by heterozygous mutations in CBFA1. The CBFA1 knockout mice showed no osteogenesis and had maturational disturbance of chondrocytes. CONCLUSION: Smads and related transcription factors, especially Smad1, Smad5, Smad8 and CBFA1, play an important role in the signal transduction of BMPs inducing bone formation.