Abstract α2-HS-glycoprotein (Ahsg), also known as fetuin is a serum and bone resident glycoprotein, which binds to TGF-β superfamily members including bone morphogenetic proteins (BMP) and inhibits dexamethasone-induced osteogenesis in bone marrow cultures in vitro. Here we demonstrate that Ahsg reduces cytokine binding to its cognate receptor in HOS osteocyte cells and suppresses intracellular signaling, while in vivo, we test the hypothesis that Ahsg-deficient mice are hyper-responsive to BMP-induced osteogenesis. Human native BMP was implanted into the hindquarter muscles of Ahsg +/+, Ahsg +/− and Ahsg −/− mice and 4 weeks later, ossicle formation was analyzed by radiography, bone density scanning (DEXA) and histomorphometry. Alkaline phosphatase (AP) activity was measured in ossicles as a marker for bone cell differentiation, and was significantly higher in Ahsg −/− versus Ahsg +/− and/or Ahsg +/+ mice. Ectopic ossicle size in the Ahsg +/− mouse was 4-fold greater than that in the wild type (Ahsg +/+), and intermediate to that shown in Ahsg −/− mouse. Bone mineral density (BMD) was lower in the Ahsg −/+ and Ahsg −/− mice compared to Ahsg +/+ littermates. The ratio of cortical to cancellous bone was found to be >2-fold higher in Ahsg −/− mouse in comparison to the Ahsg +/+ mice with no significant change in the Ahsg −/+ mouse. Finally, a significantly higher incidence of satellite ossification; small islands of immature bone, was shown in Ahsg −/− mice as compared to Ahsg +/+ mice. Although Ahsg binds to TGF-β/BMP and blocks receptor signalling, it may also sequester cytokines in matrix, thereby acting as a reservoir of osteoinductive activity when released. This may explain the non-linear relationship between ectopic bone formation characteristics and Ahsg +/+, Ahsg +/− and Ahsg −/− genotypes, although the increase in satellite bone formation might also explain this phenomenon. Our results suggest that Ahsg may be useful for prevention of the heterotopic ossification and the regulation of osteoinductive effects of BMP used with grafts.