We present evidence of cell death by apoptosis during the development of bone-like tissue formation in vitro. Fetal rat calvaria-derived osteoblasts differentiate in vitro, progressing through three stages of maturation: a proliferation period, a matrix maturation period when growth is downregulated and expression of the bone cell phenotype is induced, and a third mineralization stage marked by the expression of bone-specific genes. Here we show for the first time that cells differentiating to the mature bone cell phenotype undergo programmed cell death and express genes regulating apoptosis. Culture conditions that modify expression of the osteoblast phenotype simultaneously modify the incidence of apoptosis. Cell death by apoptosis is directly demonstrated by visualization of degraded DNA into oligonucleosomal fragments after gel electrophoresis. Bcl-XL, an inhibitor of apoptosis, and Bax, which can accelerate apoptosis, are expressed at maximal levels 24 h after initial isolation of the cells and again after day 25 in heavily mineralized bone tissue nodules. Bcl-2 is expressed in a reciprocal manner to its related gene product Bcl-XL with the highest levels observed during the early post-proliferative stages of osteoblast maturation. Expression of p53, c-fos, and the interferon regulatory factors IRF-1 and IRF-2, but not cdc2 or cdk, were also induced in mineralized bone nodules. The upregulation of Msx-2 in association with apoptosis is consistent with its in vivo expression during embryogenesis in areas that will undergo programmed cell death. We propose that cell death by apoptosis is a fundamental component of osteoblast differentiation that contributes to maintaining tissue organization.