Transforming growth factor-β (TGFβ), 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. TGFβ 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 TGFβ. Increases in AP activity were detectable after 24 h and increased progressively with time. TGFβ increased AP activity under serum-free conditions and during thymidine-induced inhibition of DNA synthesis. The increase in AP activity mediated by TGFβ 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 TGFβ. The data suggest that TGFβ stimulates expression of the osteoblastic phenotype in ROS 17/2.8 cells and that TGFβ may be an important regulator of local bone remodeling. (Endocrinology121: 212–218,1987)