We isolated osteoblastic cells derived from human periosteum and established them in culture. Their growth depended on the presence of ascorbic acid, and the doubling time was 40 to 60 h. The requirement for ascorbic acid was used to high production of collagen. These cells produced mainly type I collagen and only small amounts of type III collagen determined by reducing sodium dodecyl sulfate SDS-polyacrylamide gel electrophoresis. The total collagen yield was about 10 mg from 2 X 10(7) cells. The cells could be continuously cultured in alpha-minimum essential medium supplemented with 10% fetal bovine serum for 18 to 40 population doubling levels, depending on the age of the donated periosteum. These cells have the ability to calcify when incubated with 2 mM alpha-glycerophosphate-Na2. Calcification as viewed by the naked eye appeared from Day 15 after treatment. Treatment with the active formed vitamin D3, 1, 25 dihydroxyvitamin D3 enhanced calcification significantly and stimulated osteocalcin production. By electron microscopy, cells with many projections on their surfaces showed well-developed rough endoplasmic reticulum and actinlike fibers, and larger numbers of lysosomes, mitochondria, and secretion granules. Many matrix vesicles, in which minerals were initially localized, and well-banded collagen fibrils were seen in the intercellular spaces. These observations demonstrate typical osteoblastic morphology. The above results indicate that cultured cells from human periostem are osteoblastic cells that have the capacity to differentiate into osteocytes and to deposit calcified minerals in response to 1,25 dihydroxyvitamin D3.