Transforming growth factor β(TGF-β) is a multifunctional polypeptide with diverse effects on the proliferation, differentiation and other functions in many cell types. TGF-β is highly abundant in bone matrix and induces divergent responses in many aspects of bone cell metabolism . Several lines of investigation indicate that matrix-associated TGF-β is the products of bone cells themselves. However, exact bone cell type reponsible for the production of TGF-β is still in controversy, The present study was undertaken to determine the cellular origin of matrix-associated TGF-β and to assess how different bone cells respond to TGF-β. As a prerequisite for this, 5 bone cell populations of distinct phenotype were isolated from fetal calvaria with sequential enzyme digestion protocol and biochemical characterization. Calvarial cell populations released in early stage showed fibroblastic features whereas populations relesed later was enriched with osteoblast-like cell as judged by their acid and alkaline phosphatase activities, cAMP responsiveness to parathyroid hormone, calcitonin and prostaglandin E2 and collagen synthesis rate. By polyacylamide gel and immunoblot analysis of bone and calvarial cell extracts, presence of TGF-β in bone tissues and production of TGF-β by bone cells were confirmed again. Subsequent analysis of calvarial cell extracts prepared as individual population revealed that all calvarial cell populations synthesize TGF-β. Exogenously added TGF-β induced biphasic response upon bone cell proliferation under serum-free condition. In osteoblastic cell populations, it was stimulatory whereas inhibitory in fibroblastic cell populations. In contrast, collagen and noncollagen protein synthesis of all calvarial cell populations were stimulated by TGF-β. Enhancement of protein synthesis was found to be more general rather than specific for collagen synthesis. In addition, effects of TGF-β on protein synthesis were independent to its effects on cell proliferation. In summary, production of TGF-β by bone cells and differential actions on various cell populations observed in this study suggest that TGF-β may play an important role in the regulation of bone metabolism by modulating the specific cellular functions in autocrine and paracrine fashion.