In postmenopausal women, estrogen withdrawal results in decrease in bone density or osteoporosis. Osteoporosis leads to fracture and retards bone-healing response. Bone morphogenetic protein-7 (BMP-7), a member of the transforming-growth factor-beta superfamily, has been shown as a promising candidate that stimulates bone growth in its application to fracture healing. The purpose of this study was to determine whether BMP-7 could enhance bone formation in the absence of estrogen. Female rats underwent a controlled closed fracture at the midshaft of the right femur. The callus tissues were harvested from the fracture site eight days following the fracture, and were cultured in serum-free media. The explanted callus tissues were then treated with BMP-7, estrogen (E2) or both. We assessed bone formation by measuring alkaline phosphatase (AP) activity, expression of an osteogenic transcription factor, Runt-related transcription factor-2 (Runx2), production of nitric oxide (NO), and calcium mineralization. Supplementation of serum-free cultures with BMP-7 alone increased cell proliferation by twofold, caused a 6.5-fold increase in AP activity, and enhanced calcium mineralization after 48 h. Moreover, BMP-7 in combination with E2 caused a 8.2-fold increase in the AP activity. Runx2 protein expression was increased following stimulation with BMP-7 and E2. Interestingly, E2 induced the amount of NO production by twofold, whereas BMP-7 did not, either alone or with E2. Thus, BMP-7 could enhance early and late markers of bone fracture healing in callus explant cultures, except for NO. BMP-7 could be a promising growth factor in the treatment of fractures as a consequence of osteoporosis.