Calcium-activated neutral protease activity was detected in mouse MC3T3-E1 cell extracts. Inclusion of the cysteine protease inhibitor, E64c, reduced the activity, while pretreatment of intact cells with 10 nM parathyroid hormone for 90 minutes increased it. The presence of calpains in solubilized cells was confirmed by Western blotting using an antibody specific for the 80 K catalytic subunit. These results, combined with the observation that preincubation with a membrane-permeable cysteine protease inhibitor ablates 50% of the PTH-induced osteoblastic retraction, suggest that calpain-catalyzed hydrolysis of regulatory enzymes or structural proteins plays a role in mediating its short-term effects in bone.