Heterotopic ossification (HO) is defined as ectopic bone formation around joints and in soft tissues following trauma, particularly blast-related extremity injuries, thermal injuries, central nerve injuries, or orthopaedic surgeries, leading to increased pain and diminished quality of life. Current treatment options include pharmacotherapy with non-steroidal anti-inflammatory drugs, radiotherapy, and surgical excision, but these treatments have limited efficacy and have associated complication profiles. In contrast, small molecule inhibitors have been shown to have higher specificity and less systemic cytotoxicity. Previous studies have shown that bone morphogenetic protein (BMP) signaling and downstream non-canonical (SMAD-independent) BMP signaling mediated induction of TGF-β activated kinase-1 (TAK1) contributes to HO. In the current study, small molecule inhibition of TAK1, NG-25, was evaluated for its efficacy in limiting ectopic bone formation following a rat blast-associated lower limb trauma and a murine burn tenotomy injury model. A significant decrease in total HO volume in the rat blast injury model was observed by microCT imaging with no systemic complications following NG-25 therapy. Furthermore, tissue-resident mesenchymal progenitor cells (MPCs) harvested from rats treated with NG-25 demonstrated decreased proliferation, limited osteogenic differentiation capacity, and reduced gene expression of Tac1, Col10a1, Ibsp, Smad3, and Sox2 (P < 0.05). Single cell RNA-sequencing of murine cells harvested from the injury site in a burn tenotomy injury model showed increased expression of these genes in MPCs during stages of chondrogenic differentiation. Additional in vitro cell cultures of murine tissue-resident MPCs and osteochondrogenic progenitors (OCPs) treated with NG-25 demonstrated reduced chondrogenic differentiation by 10.2-fold (P < 0.001) and 133.3-fold (P < 0.001), respectively, as well as associated reduction in chondrogenic gene expression. Induction of HO in Tak1 knockout mice demonstrated a 7.1-fold (P < 0.001) and 2.7-fold reduction (P < 0.001) in chondrogenic differentiation of murine MPCs and OCPs, respectively, with reduced chondrogenic gene expression. Together, our in vivo models and in vitro cell culture studies demonstrate the importance of TAK1 signaling in chondrogenic differentiation and HO formation and suggest that small molecule inhibition of TAK1 is a promising therapy to limit the formation and progression of HO.