Cells derived from embryonic rat calvariae were immortalized by retroviral delivery of cDNA for the SV-40 large T antigen and the bacterial neomycin resistance gene. After selection with G418, cells were cloned by limiting dilution and screened for expression of osteoblast characteristics. One clone (RCT-3), derived from cells collected during the third period of enzymatic digestion, showed high constitutive expression of alkaline phosphatase (ALP), synthesized type I collagen in the virtual absence of type III and exhibited a parathyroid hormone (PTH)-responsive adenylate cyclase (EC50, 10 nM). Messenger RNAs for osteonectin and osteopontin were present in RCT-3 cells and osteopontin mRNA was enhanced by 1,25 (OH)2 vitamin D3 treatment. The other cell line (RCT-1), derived from cells released during the first 10 min of digestion, expressed osteoblast features only after 3 d treatment with 1 microM retinoic acid (RA). ALP activity increased from 0.003 to 0.25 mumole/min/mg protein, there was a substantial increase in the steady-state level of type I collagen mRNA and a dose-dependent and saturable response to PTH was induced (EC50, 10 nM). Osteopontin mRNA was induced by 1,25 (OH)2D3. This study has provided two new cell lines which may be useful models for studies of differentiation-related gene expression in bone cells.