We characterized the effect of the tumor promoter phorbol 12-myristate 13-acetate (PMA) on osteoblast function and DNA synthesis in 21-day-old fetal rat calvaria maintained in organ culture. Protein synthesis was determined by measuring the incorporation of [3H]proline into collagenase-digestible (CDP) and noncollagen protein (NCP), respectively. Alkaline phosphatase activity was assessed as the release of p-nitrophenol from p-nitrophenol phosphate. DNA synthesis was determined by the incorporation of [3H]thymidine into acid-insoluble bone and total DNA content. PMA at 3-100 ng/ml (4-133 nM) caused a dose-related inhibition of collagen synthesis that was observed 6 hours after adding PMA to calvaria. PMA inhibited collagen synthesis in the osteoblast-rich central bone of calvaria but did not alter collagen synthesis in the periosteum. There was little effect of PMA on noncollagen protein synthesis in the central bone or periosteum. Phorbol esters that do not promote tumor formation in vivo did not alter collagen synthesis in calvaria. PMA stimulated prostaglandin E2 (PGE2) production in calvaria, but indomethacin did not alter the inhibitory effect of PMA on bone collagen synthesis. PMA decreased alkaline phosphatase activity measured after 48 hr of culture and increased the incorporation of [3H]thymidine into bone and DNA content after 96 hr of culture. These data indicate that PMA inhibits collagen synthesis and alkaline phosphatase activity, while stimulating DNA synthesis, suggesting that activation of protein kinase C might regulate osteoblast function and bone cell replication.