A temporal sequence of interrelated cellular, biochemical, and molecular events which occurs during the progressive expression of the differentiated osteoblast phenotype in primary cultures of fetal rat calvarial cells results in the development of a bone-tissue-like organization. This ordered developmental sequence encompasses three periods: proliferation, matrix maturation, and mineralization. Initially, the cells actively proliferate and synthesize type I collagen. This is followed by a period of matrix organization and maturation and then by a period of extracellular matrix mineralization. At the completion of proliferation, when expression of osteoblast phenotype markers such as alkaline phosphatase is observed, the cell-cycle-related histone genes are down-regulated transcriptionally, suggesting that a key signaling mechanism at this transition point involves modifications of protein-DNA interactions in the regulatory elements of these growth-regulated genes. Our results demonstrate that there is a selective loss of interaction of the promoter binding factor HiNF-D with the site II region of an H4 histone gene proximal promoter that regulates the specificity and level of transcription only when the down-regulation of proliferation is accompanied by modifications in the extracellular matrix that contribute to progression of osteoblast differentiation. Thus, this specific loss of protein-DNA interaction serves as a marker for a key transition point in the osteoblast developmental sequence, where the downregulation of proliferation is functionally coupled to the appearance of osteoblast phenotypic properties associated with the organization and maturation of an extracellular matrix that becomes competent to mineralize.Defining the cellular, biochemical, and molecular events associated with osteoblast development and differentiation can provide valuable understanding of bone formation and a broad spectrum of bone-related diseases. Primary cultures of osteoblasts isolated from the calvaria of fetal rats undergo during a 35-day period an ordered developmental sequence in which the cells progressively acquire the phenotypic properties of mature osteoblasts in a mineralized extracellular matrix having a bone-tissue-like organization (1-4). The temporal expression of genes observed in cultured osteoblasts (3,5,6) is similar to that during fetal formation of the calvarium in intact animals (7), supporting the biological relevance of the culture system. This series of changes may be used to define three periods during the development of the osteoblast phenotype where, in this normal diploid cell culture system, the regulatory mechanisms operative in the relationship between proliferation and differentiation can be expected to be retained. The osteoblasts undergo proliferation during the initial period following isolation of primary cultures, as reflected by[3H]thymidine incorporation and H4 histone gene expression, which parallel DNA synthesis. Expression of type I collagen genes during the proliferative peri...