Transforming growth factor beta (TGF beta) and 1,25-dihydroxyvitamin D3 (1,25D3), when added simultaneously to a human osteosarcoma cell line, MG-63, induce alkaline phosphatase activity 40-70-fold over basal levels, 6-7-fold over 1,25D3 treatment alone, and 15-20-fold over TGF beta treatment alone. TGF beta and 1,25D3 synergistically increased alkaline phosphatase specific activity in both matrix vesicles and plasma membrane isolated from the cultures, but the specific activity was greater in and targeted to the matrix vesicle fraction. Inhibitor and cleavage studies proved that the enzymatic activity was liver/bone/kidney alkaline phosphatase. Preincubation of MG-63 cells with TGF beta for 30 min before addition of 1,25D3 was sufficient for maximal induction of enzyme activity. Messenger RNA for liver/bone/kidney alkaline phosphatase was increased 2.1-fold with TGF beta, 1.7-fold with 1,25D3, and 4.8-fold with the combination at 72 h. Human alkaline phosphatase protein as detected by radioimmunoassay was stimulated only 6.3-fold over control levels with the combination. This combination of factors was tested for their effect on production of three other osteoblast cell proteins: collagen type I, osteocalcin, and fibronectin. TGF beta inhibited 1,25D3-induced osteocalcin production, whereas both factors were additive for fibronectin and collagen type I production. TGF beta appears to modulate the differentiation effects of 1,25D3 on this human osteoblast-like cell and thereby retain the cell in a non-fully differentiated state.