The proinflammatory cytokines interleukin-1 beta (IL-1β) and interferon gamma (IFN-γ) play important roles in the progressive loss of beta-cell mass and function during development of both type 1 and type 2 diabetes. We have recently showed that bone morphogenetic protein (BMP)-2 and -4 are expressed in pancreatic islets and inhibit beta-cell growth and function. In this study, we describe that IL-1β and IFN-γ induce the expression of BMP-2 suggesting a possible role for BMP-2 in mediating the effects of IL-1β and IFN-γ on beta-cell apoptosis and dysfunction. IL-1β increased BMP-2 mRNA levels 6- and 3-fold in isolated islets of Langerhans from neonatal rat and human. Downstream target genes of the BMP pathway were also increased by cytokine treatment and could be reversed by neutralization of endogenous BMP activity. Nuclear factor kappa B- (NFκB) binding sites were identified in the rat BMP-2 promoter, and reporter assays verified the role of NFκB in cytokine-induced BMP-2 expression. Electrophoretic mobility shift assay and chromatin immunoprecipitation assays confirmed NFκB binding to BMP-2 promoter upon IL-1β stimulation in beta cells. In conclusion, we suggest that NFκB stimulates BMP-2 mRNA expression in rat and human beta cells upon cytokine exposure.