Although gestagens have been reported to influence bone metabolism, whether these contribute to the beneficial effects of hormone replacement therapy (HRT) on the skeleton of postmenopausal women is currently unclear. To address this question, we compared changes in bone turnover markers after commencing HRT in 26 postmenopausal women randomized to receive 8 weeks of treatment with 2 mg estradiol daily or 2 mg estradiol plus 10 mg dydrogesterone daily. Serum and second morning void urine samples were obtained at baseline (twice) and after 1, 2, 4, and 8 weeks. Serum estradiol was measured by RIA, urinary total deoxypyridinoline (DPD) excretion by high pressure liquid chromatography, and serum osteocalcin and C-terminal procollagen peptide by enzyme-linked immunosorbent assay. The increase in serum estradiol after treatment with estradiol alone was slightly, but significantly, greater than that in the combination group (P = 0.04). Although estradiol suppressed urinary DPD excretion to a greater extent when given alone (P = 0.02), osteocalcin levels were significantly higher in this group than in women receiving combination therapy (P = 0.04). To assess the effect of dydrogesterone on the balance between formation and resorption in more detail, we subsequently compared the ratio between formation and resorption markers in the two treatment groups. We found that osteocalcin/DPD and C-terminal procollagen peptide/DPD ratios were significantly higher in women treated with estradiol alone (P < 0.0001 and P = 0.002, respectively), suggesting that dydrogesterone may reduce formation relative to resorption. These results suggest that gestagens may reduce estrogen's beneficial effects on the skeleton of postmenopausal women, as assessed over the first 8 weeks of replacement therapy.