Human bone marrow contains a distinct cell population that expresses bone proteins and responds to transforming growth factor beta 1 (TGF-beta), but not to hematopoietic growth factors (Long, M. W., J. L. Williams, and K. G. Mann. 1990. J. Clin. Invest. 86:1387-1395). We now report the isolation, characterization, and growth factor responsiveness of these precursors to human osteoblasts and the identification of a human osteoprogenitor cell. Immunological separation of human bone marrow nonadherent low-density (NALD) cells results in a marked enrichment of cells that express osteocalcin, osteonectin, and bone alkaline phosphatase. Flow cytometric analyses show that distinct cell subpopulations exist among these isolated cells. The majority of the bone antigen-positive cells are approximately the size of a lymphocyte, whereas other, less frequent antibody-separated subpopulations consist of osteoblast-like cells and osteoprogenitor cells. In serum-free cultures, TGF-beta stimulates the small, antigen-positive cells to become osteoblast-like, as these cells both increase in size, and express increased levels of osteocalcin and alkaline phosphatase. Antibody-separated cells also contain a separate population of clonal progenitor cells that form colonies of osteoblast-like cells when cultured in serum-free, semi-solid media. Two types of human osteoprogenitor cells are observed: a colony-forming cell (CFC) that generates several hundred bone antigen-positive cells, and a more mature cluster-forming cell that has a lesser proliferative potential and thus generates clusters of 20-50 antigen-positive cells. Osteopoietic colony-forming cells and cluster-forming cells have an obligate but differential requirement for osteogenic growth factors. The CFCs respond to TGF-beta, basic fibroblast growth factor (bFGF), bone morphogenic protein-2 (BMP-2), and 1, 25-dihydroxy vitamin D3 (1,25-OH D3). In contrast to the colony-forming cells, cluster-forming cells are regulated predominantly by 1,25-OH D3 and TGF-beta, but fail to respond to bFGF. We conclude that human bone marrow contains a nonhematogenous, heterogeneous population of bone precursor cells among which exists a population of proliferating osteoprogenitor cells. Further characterization of these bone precursor cell populations should yield important information on their role in osteogenesis in both health and disease.