The effects of PGE₂ on mineralized bone nodule formation were studied in fetal rat calvarial (RC) cells in vitro. Continuous exposure of RC cells to 3x10^-8M PGE₂ induced a twofold increase in mineralized bone nodule formation and a 1.5-fold increase in alkaline phosphatase (ALPase) activity without affecting RC cell growth. These stimulatory effects were evoked by concentrations of 3x 10^-9-3x10^-6 M PGE₂ and the maximal effect was observed with 3x10^-8 M PGE₂. The in vitro effects of PGE₂ were evident when RC cells were exposed to it on days 8–14 and 8–21, which correspond to the post-confluent culture stage, but no effects were observed when the cells were exposed on days 1–7, the growth stage. The ALPase activity was also higher (1.2–1.4-fold) when 3x10^-8 M PGE₂ was added during the post-confluent stage. In order to determine the effect of PGE₂ during the mineralization phase of bone nodules in the presence of a large population of osteoprogenitor cells, RC cells were exposed to dexamethasone for 7 days before PGE₂ was added during the post-confluent stage. A significantly higher percentage of nodules mineralized were observed with 3x10^-8-3x10^-9 M PGE₂ (1.6-and 1.4-fold, respectively), than in control cultures. Analysis of the mineral-related proteins by EDTA extraction of bone nodules followed by electrophoresis and Stains-All staining revealed an increased total amount of osteopontin extracted from the mineralized matrix after PGE₂ treatment. The osteopontin content was highest after 3x10^-8 M PGE₂, with a 73% increase of the densitometric intensity of the bands, although this increase, reflected the increased number of mineralized bone nodules due to PGE₂. These findings suggest that PGE₂ may increase the proportion of functional osteoblasts able to produce mineralized bone nodules in the population by stimulating differentiation during the postconfluent stage of RC cell culture.