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Bone morphogenetic proteins (BMPs) play critical roles in cellular proliferation, differentiation, and programmed cell death in multiple tissues. An increasing body of recent evidence has suggested that classes of molecules collectively termed BMP antagonists play important roles for the local regulation of BMP actions by binding BMPs and neutralizing their activities. Uterine sensitization-associated gene-1 (USAG-1) was previously reported as a gene of unknown function, preferentially expressed in sensitized endometrium of the rat uterus. Here, we show that USAG-1 is abundantly expressed in the kidney and functions as a BMP antagonist. Recombinant USAG-1 binds directly to BMPs and antagonizes the BMP-mediated induction of alkaline phosphatase in C2C12 cells. USAG-1 also induces formation of secondary axis and/or hyperdorsalization when its mRNA is injected to Xenopus embryos. In the early stage of mouse embryogenesis, USAG-1 is expressed in the first and second branchial arches and in metanephros, while in later stages the expression is confined to renal tubules and ameloblasts of teeth. Postnatally, the expression is further restricted to distal tubules of kidney, in a pattern similar to the localization of BMP-7, which has been shown to be important in the development of kidney and preservation of adult renal functions under pathological stresses. Collectively, we suggest that USAG-1 is a BMP antagonist that interacts with BMP-7 in the developing and adult kidney. [Copyright &y& Elsevier]