The observed increase in urokinase-type plasminogen activator (u-PA) and its receptor (u-PAR) in synovial tissue of patients with rheumatoid arthritis (RA) suggests pathophysiological involvement of the plasminogen activation (PA) system in inflammatory joint disease. In the present study, we investigated the capacity of the PA system to degrade non-mineralized and mineralized bone-like matrix in vitro as a model for bone destruction. Transfected mouse LB6 cell lines, that expressed either human u-PA or u-PAR, were cultured separately and simultaneously on radiolabelled bone matrix in the presence of plasminogen. Osteoblast-like murine calvarial MC3T3-E1 cells were used to produce a well-characterized, highly organized bone-like matrix, that could be mineralized in the presence of beta-glycerol phosphate. Bone matrix degradation was followed by the release of radioactivity in the culture medium. u-PA-producing cells, in contrast to u-PAR-producing cells, degraded both non-mineralized and mineralized bone matrix. This effect could be inhibited by anti-u-PA antibodies, as well as by tranexamic acid and by aprotinin, indicating that the degrading activity is u-PA mediated and plasmin dependent. Co-cultivation of a small portion of u-PA-producing cells with u-PAR-expressing cells resulted in a marked increase in degradation activity. Reduction of this potentiating effect by suramin or the amino-terminal fragment of u-PA, both competitive inhibitors of u-PA receptor binding, shows that this synergistic effect is due to binding of u-PA to u-PAR. u-PAR must be cell associated, as binding of u-PA to a soluble u-PAR prevented this enhancement. The capability of the PA system to degrade bone matrix in vitro, and the previously demonstrated increased expression of u-PA and u-PAR in synovial tissue of patients with RA, further support a role for the PA system in the development of bone erosions.