The effects of PTH on osteoprogenitor cell differentiation have been analyzed by quantifying its effects on bone nodule formation in an in vitro assay. Fetal rat calvaria cells were plated at 3 x 10(4) cells/35-mm dish, and cultures were maintained for 17-23 days in alpha-Minimal Essential Medium containing ascorbic acid, Na beta-glycerophosphate, and 10% fetal bovine serum. Continuous exposure to PTH at concentrations from 1 pM to 1 nM (2 x 10(-5) to 2 x 10(-2) IU/ml) caused a dose-dependent inhibition of bone nodule formation. Half-maximal inhibition occurred at 0.05 nM, and total inhibition at 1 nM, concentrations much lower than those required to elicit a significant cAMP response in rat calvaria cells. PTH at the concentrations used did not affect cell growth or saturation density. While continuous exposure to 1 nM PTH eliminated bone nodule formation, a single 48-h pulse administered at any time during the 17-day culture period had no effect. When 1 nM PTH was added on day 1 and removed at different times during the culture period, a time-related release from inhibition was observed. Cultures exposed to 1 nM PTH until nodules had developed in the corresponding control cultures and then switched to medium without added PTH rapidly formed clusters of differentiated osteoblasts and nodules within 3 days. PTH added at different times during the culture period and present continuously there-after suppressed formation of new nodules, the magnitude of the effect being a function of the duration of exposure. The results show that PTH at physiological concentrations is a potent suppressor of osteoblast differentiation and that its effect occurs at a late stage in the differentiation of osteoprogenitor cells, probably preventing differentiation of preosteoblasts into osteoblasts.