We studied the effect of 17 beta-estradiol (E) on the proliferation and alkaline phosphatase activity of cultured UMR106 cells, a clonal osteoblastic cell line. Growth rates were reduced and alkaline phosphatase activity was increased in cells incubated for 2 days in medium containing E (10(-8) M). In contrast, E had no effect on the growth rates or alkaline phosphatase of a human fibroblastic cell line, S90E. The effect of E was not observed with low cell density or at confluence. 1,25-Dihydroxyvitamin D3 antagonized the response to E. Preincubation of the cells with dexamethasone, a potent inducer of differentiation, reversed the effect of E or 1,25-dihydroxyvitamin D3. These results indicate that cellular and/or extracellular factors such as cell density, the phase of the cell cycle, the state of differentiation, and the presence or absence of other steroids influenced the response of UMR106 cells to E. Serum was removed from the culture medium to minimize the effect of the steroids, growth factors, and nutrients present in serum. A striking stimulation of alkaline phosphatase by E occurred with serum-free conditions. This stimulation was biphasic over an E concentration from 10(-12) to 10(-8) M, with the peak response at 10(-10) M. The action of E on UMR106 cells was metabolite-specific, since the isomer 17 alpha-estradiol produced no effect on proliferation rates or alkaline phosphatase activity. The cyclic AMP response to parathyroid hormone (residues 1-34) was not altered by E treatment of these cells. In contrast, dexamethasone exposure did increase the cyclic AMP response to parathyroid hormone. These results demonstrate a direct effect of E on an osteoblastic cell line. They also raise the possibility that similar or identical actions of E occur in cultured normal osteoblasts.