Although steroid hormones regulate mature osteoblast function, much less is known about their actions on osteoprogenitor cells. The possibility of steroid hormone regulation of early stages in osteoblast differentiation was investigated by measuring the growth and induction of the osteoblast marker enzyme alkaline phosphatase (AP) in rat bone marrow stromal cell cultures. Experiments were performed in charcoal-stripped serum; conditions which markedly impaired stromal cell growth. However, growth could be stimulated by nonadherent marrow cell-derived conditioned medium. 1,25(OH)2D3, but not dexamethasone, 17 beta-estradiol, or retinoic acid, increased both stromal cell proliferation and AP activity. The increased proliferation with 1,25(OH)2D3 was nonadherent cell-dependent. BMP-2 also increased AP levels and acted in synergy with 1,25(OH)2D3. These results suggest that (i) nonadherent marrow cells may support stromal cell development, and (ii) 1,25(OH)2D3 as well as glucocorticoids may regulate osteogenesis from the bone marrow but a similar role for estrogen is not supported.