Pro-inflammatory cytokines prevent bone regeneration in vivo and activation of nuclear factor-κB (NF-κB) signaling has been proposed to lead to suppression of bone morphogenetic protein (BMP)-induced osteogenesis via direct binding of p65 to Smad4 in vitro. Application of a small nuclear acidic protein (MTI-II) and its delivered peptide, MPAID (MTI-II peptide anti-inflammatory drug) has been described to elicit therapeutic potential via strong anti-inflammatory action following the physical association of MTI-II and MPAID with p65. However, it is unclear whether MTI-II attenuates tumor necrosis factor (TNF)-α inhibition of BMP-induced osteogenesis. Herein, we found that TNF-α-mediated suppression of responses associated with BMP4-induced osteogenesis, including expression of the osteocalcin encoding gene Ocn, Smad binding element (SBE)-dependent luciferase activity, alkaline phosphatase activity, and alizarin red S staining were largely restored by MTI-II and MPAID in MC3T3-E1 cells. Mechanistically, MTI-II and MPAID did not inhibit nuclear translocation of p65 or disassociate Smad4 from p65. Further, results from chromatin immunoprecipitation (ChIP) analyses revealed that Smad4 enrichment in cells over-expressing MTI-II and treated with TNF-α was equivalent to that in cells without TNF-α treatment. Alternatively, Smad4 enrichment was considerably decreased following TNF-α treatment in control cells. Moreover, p65 enrichment in the Id-1 promoter SBE was detected only when cells over-expressing MTI-II were stimulated with TNF-α. Overall, our study concludes that MTI-II restored TNF-α-inhibited suppression of BMP-Smad-induced osteogenic differentiation by enhancing accessibility of the Smad4-p65 complex to the SBE rather than by liberating Smad4 from p65.