Reported assays of the bone morphogenetic proteins (BMPs) have not in general revealed specific functions for the different proteins, belying the specificity implied by the evolutionary conservation and distinct expression patterns of the genes encoding BMPs. We have used assays of developmental function to show that the two Drosophila homologues of the BMPs, decapentaplegic (dpp) and 60A, that both induce ectopic bone formation in mammalian assay systems, have distinct effects in Drosophila development. A binary expression system using the yeast transcriptional activator GAL4 directed identical patterns of tissue and temporally specific dpp and 60A expression. When dpp enhancer elements drove GAL4 expression, GAL4-responsive dpp transgenes rescued dpp mutant phenotypes, but GAL4-responsive 60A transgenes did not. Ectopic ectodermal expression of dpp during gastrulation respecified the dorsal/ventral pattern of the embryo. In contrast, ectopic 60A expression had no detectable effects on embryonic development but led to defects in adult structures or lethality during metamorphosis. Expression of 60A in cells expressing dpp did not interfere with dpp functions, indicating that dysfunctional heterodimers did not form at sufficient levels to inhibit dpp. These specific developmental responses in Drosophila indicate that in vivo functions of BMP-like factors can be more specific than indicated by the ectopic bone formation assays and that the Drosophila embryo provides an assay system sensitive to the structural differences that contribute to BMP specificity in vivo.