We have investigated the binding of biologically active radioiodinated bovine PTH-(1-84) to cloned osteoblast-like rat osteosarcoma cells (ROS 17/2.8) and correlated binding with biological response assessed as cAMP production. The hormone was labeled with 125I on tyrosine-43 using a constant current microelectrolytic method which allows full retention of biological activity. At confluency, cells were removed from culture, and assays were carried out on intact cells in suspension. At 22 C, saturable binding reached equilibrium by 90 min. At that time, the apparent dissociation rate constant was 8 X 10(-8) min-1. At an earlier time, 10 min of incubation, the dissociation rate was twice that observed at equilibrium. Nonsaturable binding was 30-35% of the total binding. The dissociation constant derived from kinetic analysis was 41 nM and correlated with the half-maximal cAMP production at 36 nM. The results obtained suggest that cleavage amino-terminal to residue 43 is not required for binding to these bone-derived cells. Binding to receptors on the osteosarcoma cells was specific and reversible, and appeared biologically relevant, since it correlated closely with the biological response, cAMP production. The competitive inhibitor [Nle8,Nle18,Tyr34]bPTH-(3-34)amide showed the same apparent affinity in inhibiting receptor binding as in inhibiting cAMP production.