T he influence of calcitonin (CT) on various stages of bone formation was investigated. A demineralized collagenous bone matrix-induced bone forming system in rats was used to temporally segregate chondrogenesis and osteogenesis. Administration of CT (15 Medical Research Council Units [MRCU]) daily) at the initiation of matrix-induced bone formation (BF) resulted in a 76% stimulation of BF as measured by 45Ca incorporation and alkaline phosphatase activity. This increase was due, in part, to a stimulation of cartilage and bone precursor cell proliferation monitored by the rate of [3H]thymidine incorporation and ornithine decarboxylase activity. Chondrogenesis on day 7 as measured by 35SO4 incorporation was increased by 52% with CT treatment. To rule out the possibility of a secondary response due to parathyroid hormone, similar studies were done in parathyroidectomized animals and CT stimulation of BF was still observed. However, when CT injections were started after cartilage formation (day 8) there was no stimulation of BF but a significant decrease in 45Ca incorporation was observed. These results indicate CT has two actions: (a) when CT is administered during the initial phases of bone formation, it increases BF due to a stimulation of proliferation of cartilage and bone precursor cells; and (b) when CT is administered after bone formation has been initiated, subsequent bone formation is suppressed.