We have reported that a cell population obtained from fetal rat mandible with neutral protease (Pro I) has a unique differentiation sequence in which the elevation of alkaline phosphatase (ALPase), calcium accumulation, and collagen synthesis occurs simultaneously. In this report, we further characterized Pro I-released population of cells by studying the effect of dexamethasone (Dex) or beta-glycerophosphate (beta-GP) on the formation of bone nodules. The formation of bone nodules in Pro I-released population of cells (ProIRPC) was augmented by the addition of Dex (10(-7) M) from days 3 to 14, suggesting that Pro IRPC contained osteoprogenitor (OP) cells. A 24-hour pulse treatment of ProIRPC released population of cells with Dex on days 9 and 12 resulted in an increase in the number of nodules but treatment on days 3, 6, or 15 did not. The number of bone nodules formed in Pro IRPC pulse treated with Dex on day 9 was comparable with that in Pro IRPC treated with Dex from days 3 to 14. Dex caused an earlier elevation of ALPase, in which maximal expression was observed on day 10. beta-GP caused a prolonged elevation of ALPase, but did not affect the formation of bone nodules. Unlike Pro I-released population of cells, rat calvarial cells did not form mineralized nodules without beta-GP, and showed that a Dex-responsive period on bone nodule formation in rat calvarial cells was at preconfluency (days 0 and 1). Thus, it appeared that the Dex-induced differentiation of early OP cells in Pro IRPCs occurred during the limited period from day 9 to day 12. Pro IRPC was found to have an unique characteristic that bone nodule formation was not affected by beta-GP.