Resting zone and growth zone (GC) costochondral chondrocytes constitutively release latent, but not active, transforming growth factor-beta (TGF-beta) into the culture medium. When exogenous TGF-beta is added to the culture medium, no autocrine effect is observed. However, when 1,25-(OH)2D3 is added, a dose-dependent inhibition of latent TGF-beta release is found. Messenger RNA levels for TGF-beta 1 are unchanged by treatment with either 1,25-(OH)2D3 or TGF-beta 1. Since active growth factor was not observed in the conditioned medium, we tested the hypothesis that latent TGF-beta could be activated in the matrix. GC matrix vesicles, extracellular organelles associated with matrix calcification, were able to activate latent TGF-beta 1 and TGF-beta 2 when preincubated with 1,25-(OH)2D3. In contrast, GC plasma membranes activated latent TGF-beta, and addition of 1,25-(OH)2D3 inhibited this activation. The 1,25-(OH)2D3-dependent decrease in latent TGF-beta in the medium, with no detectable change in mRNA level, and the inhibition of plasma membrane activation of latent TGF-beta by 1,25-(OH)2D3 suggest that 1,25-(OH)2D3 may act through post-transcriptional and/or nongenomic mechanisms. The results also suggest that latent TGF-beta is activated in the matrix and that 1,25-(OH)2D3 regulates this activation by a direct, nongenomic action on the matrix vesicle membrane.