To determine the effects of transforming growth factor-beta (TGF-beta) on the different cell types that exist in bone, cell populations (I-IV), progressively enriched in osteoblastic cells relative to fibroblastic cells, were prepared from fetal rat calvaria using timed collagenase digestions. TGF-beta did not induce anchorage-independent growth of these cells, nor was anchorage-dependent growth stimulated in most populations studied, despite a two- to threefold increase in the synthesis of cellular proteins. In all populations the synthesis of secreted proteins increased 2-3.5-fold. In particular, collagen, fibronectin, and plasminogen activator inhibitor synthesis was stimulated. However, different degrees of stimulation of individual proteins were observed both within and between cell populations. A marked preferential stimulation of plasminogen activator inhibitor was observed in each population, together with a slight preferential stimulation of collagen; the effect on collagen expression being directed primarily at type I collagen. In contrast, the synthesis of SPARC (secreted protein acidic rich in cysteine/osteonectin was stimulated approximately two-fold by TGF-beta, but only in fibroblastic populations. Collectively, these results demonstrate that TGF-beta stimulates matrix production by bone cells and, through differential effects on individual matrix components, may also influence the nature of the matrix formed by different bone cell populations. In the presence of TGF-beta, osteoblastic cells lost their polygonal morphology and alkaline phosphatase activity was decreased, reflecting a suppression of osteoblastic features. The differential effects of TGF-beta on bone cell populations are likely to be important in bone remodeling and fracture repair.