A clonal cell strain, UMR 201, was established from a culture of rat calvarial cells by the process of limiting dilution on a collagen substratum. One-day-old neonatal rat calvaria stripped of periosteum were placed on collagen in alpha-MEM with 10% fetal bovine serum (FBS). Cells that grew out from the calvaria were passaged eight times to select cells with the ability to proliferate in culture before cloning was attempted. Cells from the clonal strain were homogeneous in appearance with a doubling time in culture of about 24 hours. The UMR 201 cells formed predominantly type 1 collagen. When treated with retinoic acid (RA), all cells showed an intense staining for alkaline phosphatase (ALP). This effect of RA on the expression of ALP activity was reversible and was time and dose dependent. The earliest change was observed within 6 hours. In contrast, single and isolated clumps of untreated cells stained positively for ALP only when they were confluent. Coincubation with dactinomycin up to 3 hours after the addition of RA completely prevented the expression of ALP, whereas dactinomycin became progressively less effective when added at later times. This is interpreted as indicating a regulatory role of RA on the gene expression of ALP. Other hormones acting on bone, such as 1,25(OH)2 vitamin D3 and dexamethasone, also modulate ALP activity. The cells showed morphologic evidence of senescence after passage 12. Our preliminary studies showed that the UMR 201 cells had the characteristics of relatively undifferentiated mesenchymal cells.(ABSTRACT TRUNCATED AT 250 WORDS)