Modern treatments of bone injuries and diseases are becoming increasingly dependent on the usage of growth factors to stimulate bone growth. Bone morphogenetic protein-2 (BMP-2), a potent osteogenic inductive protein, exhibits promising results in treatment models, but recently has had its practical efficacy questioned due to the lack of local retention, ectopic bone formation, and potentially lethal inflammation. Where a new delivery technique of the BMP-2 is necessary, here we demonstrate the viability of an elastin-like peptide (ELP) fusion protein containing BMP-2 for delivery of the BMP-2. This fusion protein retains the performance characteristics of both the BMP-2 and ELP. The fusion protein was found to induce osteogenic differentiation of mesenchymal stem cells as evidenced by the production of alkaline phosphatase and extracellular calcium deposits in response to treatment by the fusion protein. Retention of the ELPs inverse phase transition property has allowed for expression of the fusion protein within a bacterial host (such as Escherichia coli) and easy and rapid purification using inverse transition cycling. The fusion protein formed self-aggregating nanoparticles at human-body temperature. The data collected suggests the viability of these fusion protein nanoparticles as a dosage-efficient and location-precise noncytotoxic delivery vehicle for BMP-2 in bone treatment. (c) 2016 American Institute of Chemical Engineers Biotechnol. Prog., 32:1029-1037, 2016