Whether tendon inflammation is involved in the development of tendinopathy or degenerative changes of the tendon remains a matter of debate. We explored this question by performing animal and cell culture experiments to determine the production and effects of PGE(2), a major inflammatory mediator in tendons. Mouse tendons were subjected to repetitive mechanical loading via treadmill running, and the effect of PGE(2) on proliferation and differentiation of tendon stem cells (TSCs) was assessed in vitro. Compared to levels in cage control mice, PGE(2) levels in mouse patellar and Achilles tendons were markedly increased in response to a bout of rigorous treadmill running. PGE(2) treatment of TSCs in culture decreased cell proliferation and induced both adipogenesis and osteogenesis of TSCs, as evidenced by accumulation of lipid droplets and calcium deposits, respectively. Effects of PGE(2) on both TSC proliferation and differentiation were apparently PGE(2)-dose-dependent. These findings suggest that high levels of PGE(2), which are present in tendons subjected to repetitive mechanical loading conditions in vivo as shown in this study, may result in degenerative changes of the tendon by decreasing proliferation of TSCs in tendons and also inducing differentiation of TSCs into adipocytes and osteocytes. The consequences of this PGE(2) effect on TSCs is the reduction of the pool of tenocytes for repair of tendons injured by mechanical loading, and production of fatty and calcified tissues within the tendon, often seen at the later stages of tendinopathy.