Osteogenic BMPs promote tumor growth of human osteosarcomas that harbor differentiation defects. Osteosarcoma (OS) is the most common primary malignancy of bone. Here, we investigated a possible role of defective osteoblast differentiation in OS tumorigenesis. We found that basal levels of the early osteogenic marker alkaline phosphatase (ALP) activity were low in OS lines. Osteogenic regulators Runx2 and OSX, and the late marker osteopontin (OPN) expressed at low levels in most OS lines, indicating that most OS cells fail to undergo terminal differentiation. Furthermore, OS cells were refractory to osteogenic BMP-induced increases in ALP activity. Osteogenic BMPs were shown to upregulate early target genes, but not late osteogenic markers OPN and osteocalcin (OC). Furthermore, osteogenic BMPs failed to induce bone formation from human OS cells, rather effectively promoted OS tumor growth in an orthotopic OS model. Exogenous expression of early target genes enhanced BMP-stimulated OS tumor growth, whereas osteogenic BMP-promoted OS tumor growth was inhibited by exogenous Runx2 expression. These results suggest that alterations in osteoprogenitors may disrupt osteogenic differentiation pathway. Thus, identifying potential differentiation defects in OS tumors would allow us to reconstruct the tumorigenic events in osteoprogenitors and to develop rational differentiation therapies for clinical OS management.