Cell lines were established by a two-step method from osteomas which had been induced by infection of mice with RFB MuLV, a bone-pathogenic, replication-competent murine retrovirus. The benign tumors, consisting of mature lamellar bone and surrounded by a thin periosteum, were cultured on sponges of denatured collagen type I fibres for up to 4 weeks. At this time osteoma cells had grown into the collagenous matrix. After release and further cultivation in monolayers, the cell lines established from these cultures varied in morphology; they expressed T1, collagen type I and type III, alkaline phosphatase, osteonectin and osteopontin mRNAs at variable levels, but not osteocalcin/BGP. They also showed alkaline phosphatase activity, but lacked responsiveness to parathyroid hormone. All cell lines established from infected mice expressed retroviral and c-myc mRNA and viral protein. In contrast to cells from control mice they showed an extended life span in culture. After growth in a three-dimensional (3-D) collagen sponge culture the cells formed an extracellular matrix containing collagen type I, alkaline phosphatase and osteocalcin/BGP. These data indicate that the two-step method facilitates the establishment of osteoblast-like cell lines from osteomas and calvaria of old mice, and provides means for further analyses of retrovirus-induced skeletal pathogenesis and bone induction.