We have previously indicated that human osteoblasts express a repertoire of cadherins and that perturbation of cadherin-mediated cell-cell interaction reduces bone morphogenetic protein 2 (BMP-2) stimulation of alkaline phosphatase activity. To test whether inhibition of cadherin function interferes with osteoblast function, we expressed a truncated N-cadherin mutant (NCaddeltaC) with dominant negative action in MC3T3-E1 osteoblastic cells. In stably transfected clones, calcium-dependent cell-cell adhesion was decreased by 50%. Analysis of matrix protein expression during a 4-week culture period revealed that bone sialoprotein, osteocalcin, and type I collagen were substantially inhibited with time in culture, whereas osteopontin transiently increased. Basal alkaline phosphatase activity declined in cells expressing NCaddeltaC, relative to control cells, after 3 weeks in culture, and their cell proliferation rate was reduced moderately (17%). Finally, 45Ca uptake, an index of matrix mineralization, was decreased by 35% in NCaddeltaC-expressing cells compared with control cultures after 4 weeks in medium containing ascorbic acid and beta-glycerophosphate. Similarly, BMP-2 stimulation of alkaline phosphatase activity and bone sialoprotein and osteopontin expression also were curtailed in NCaddeltaC cells. Therefore, expression of dominant negative cadherin results in decreased cell-cell adhesion associated with altered bone matrix protein expression and decreased matrix mineralization. Cadherin-mediated cell-cell adhesion is involved in regulating the function of bone-forming cells.