AbstractCells isolated from fetal rat calvaria (RC) and maintained in vitro in medium containing ascorbic acid and B‐glycerophosphate form three‐dimensional, mineralized nodules having the histological, immunohistological, and ultrastructural characteristics of woven bone. We have studied the effects of forskolin (FSK), a diterpene that activates adenylate cyclase, in this system. While 10−7−10−5M FSK significantly stimulated cAMP levels in RC cells, lower concentrations did not. cAMP levels with 10−5M FSK reached a maximum by 30 min at 37°C and returned to basal level in 2‐3 hr. Changes in cAMP levels correlated with changes in cellular shape: cells treated with 10−5M FSK assumed a stellate morphology, lost microfilament bundles, and reduced their substrate adhesiveness, while cells treated with 10−9M were not affected. Exponential growth and saturation densities of FSK‐treated cultures were similar to untreated cultures, indicating that FSK was neither toxic nor stimulatory to the population. The effect on bone nodule formation of FSK present continuously depended on concentration: 10−5M FSK significantly inhibited the number of nodules formed, while 10−9M FSK significantly stimulated bone nodule formation. Single short treatments with either 10−5M or 10−9M FSK had no effect on nodule formation, but repeated short duration treatments (1 hr every 2 days for 21 days) gave results similar to continuous exposure. These results indicate that intermittent elevations in intracellular cAMP have an inhibitory effect on bone formation. In addition, our work indicates that low concentrations of FSK stimulate differentiation of osteoprogenitor cells possibly through