We have previously identified glucocorticoid binding proteins in cytosol of cells dispersed from fetal rat calvaria by collagenase digestion. The present study, employing primary culture of these cells, provides further evidence that these binding proteins represent glucocorticoid receptors. [3H]Dexamethasone bound to cytoplasmic extracts of cultured cells with an apparent Kdiss of 6.8 nM and exhibited approximately 8500 binding sites/cell. Nuclear translocation of [3H]dexamethasone was demonstrated with approximately 50% of bound steroid extractable from the nuclear pellet after incubation at 37 C; little nuclear transfer occurred at 0 C. The specificity of these binding site was characterized by competition studies with other steroids in whole cells, the order of affinities being: triamcinolone acetonide greater than dexamethasone greater than progesterone greater than cortisol greater than corticosterone = cortexolone. Non-glucocorticoids except progesterone competed only poorly. Sedimentation analysis of [3H]dexamethasone-protein complexes on sucrose gradients revealed a cytoplasmic peak of 6.5 S in salt-free gradients and 3.8 S in 0.3 M KCl gradients. Dexamethasone addition to the culture medium resulted in a dose-dependent inhibition of cell growth with approximately 40% reduction in cell number at 13 nM. That this inhibition was receptor mediated was substantiated by the partial blockade of the dexamethasone effect in the presence 1.3 microM progesterone. Functionally, dexamethasone inhibits the growth of these cells. These data provide evidence for receptor mediated inhibitory effects of glucocorticoids directly at the level of the bone cell.