Transforming growth factor-beta (TGF beta), a polypeptide that controls growth and differentiation in many cell types and has recently been found in abundant amounts in bone, was examined for its effects on cells with the osteoblast phenotype using the clonal osteoblastic osteosarcoma cell line ROS 17/2.8. TGF beta increased alkaline phosphatase (AP) activity and the rate of collagen synthesis per cell. Cell proliferation was inhibited, and the morphological appearance of the cells was markedly changed. All effects were observed at concentrations as low as 0.1 ng/ml TGF beta. Increases in AP activity were detectable after 24 h and increased progressively with time. TGF beta increased AP activity under serum-free conditions and during thymidine-induced inhibition of DNA synthesis. The increase in AP activity mediated by TGF beta could be completely inhibited with actinomycin D and cycloheximide. 1,25-Dihydroxyvitamin D3 at 10(-7) M slightly increased AP activity in ROS 17/2.8 cells, but strongly inhibited AP activity when the cells were pretreated with TGF beta. The data suggest that TGF beta stimulates expression of the osteoblastic phenotype in ROS 17/2.8 cells and that TGF beta may be an important regulator of local bone remodeling.