UMR 201 is a nontransformed rat clonal cell line derived from neonatal calvaria with phenotypic characteristics of preosteoblasts. Retinoic acid strongly induces expression of alkaline phosphatase and its mRNA in these cells. Dexamethasone substantially reduced the retinoic acid-induced expression of alkaline phosphatase. This apparent interaction between dexamethasone and retinoic acid effects raised the possibility that interactions may extend to other osteoblast-related phenotypic characteristics in UMR 201 cells. Treatment with dexamethasone resulted in a decrease in the expression of mRNA for pro-alpha 1(I) collagen, but upon coincubation with 1 microM retinoic acid for 24 h, the decrease in mRNA for pro-alpha 1(I) collagen was abrogated. Dexamethasone (Dex) treatment caused a dose-dependent increase in osteonectin mRNA, half maximally effective between 1 nM and 10 nM Dex. One micromolar of retinoic acid alone led to a small increase in expression of osteonectin mRNA but prevented any further increase when Dex was added to retinoic acid-treated cells. To study transcriptional control, osteonectin genomic fragments were linked to the bacterial reporter gene, chloramphenicol acetyltransferase, and introduced by transfection into UMR 201 cells. Dexamethasone increased the transcriptional activity of an osteonectin-chloramphenicol acetyltransferase construct; 100 nM Dex resulted in a 3-fold increase over control cells which was attenuated when 1 microM retinoic acid was added to the incubation, while retinoic acid alone resulted in a 2-fold increase in transcriptional activity. Finally, it was noted that coincubation with retinoic acid and Dex stimulated the proliferation of UMR 201 cells when compared with either treatment alone. This study shows the potential importance of hormonal interactions in the expression of osteoblast function.