Bone cells derived from human trabecular explants display osteoblastic features. We examined the modulation of alkaline phosphatase activity and cAMP production as the result of exposing trabecular explants to physiologic concentrations of dexamethasone for 4 weeks during cellular outgrowth and subculture. Cells treated with dexamethasone were observed to grow generally more slowly than control cells. Cells appeared larger and more polygonal, and staining for alkaline phosphatase was more intense in the dexamethasone-exposed cultures. There was a progressive increase in cellular PTH responsiveness with increasing duration of exposure of cells to dexamethasone. Cells grown for 6 weeks in 3 x 10(-8) M dexamethasone had a 10-fold increase in PTH-stimulated cyclic AMP accumulation. Dexamethasone-treated cells also had a significantly increased alkaline phosphatase activity. 1,25-(OH)2D3-stimulated alkaline phosphatase activity was increased approximately 20-fold. cAMP responses were significantly increased to PTH (21.7-fold), PGE1 (2.67-fold), and forskolin (4.81-fold), but not to cholera toxin. Dexamethasone-treated cells also had a mean decrease in 1,25-(OH)2D3-stimulated osteocalcin production to 26.2% of control values (p less than 0.001). Hydrocortisone treatment gave rise to similar effects but of smaller magnitude than those of dexamethasone. Testosterone did not have a significant effect on alkaline phosphatase activity or cAMP production. Skin fibroblasts showed a significant enhancement of alkaline phosphatase activity in response to dexamethasone, but of a much smaller magnitude than in bone cells. The phenotypic changes induced by long-term culture in dexamethasone are consistent with the promotion of a more differentiated osteoblastic phenotype.