Thrombospondin (TSP) is a 450-kDa extracellular matrix glycoprotein which supports the growth of human MG-63 osteoblastic cells [Abbadia et al., FEBS Lett., 329 (1993) 341-346]. In this study, we describe the effect of the glucocorticoid, dexamethasone, on cell proliferation and TSP expression by MG-63 cells. Using a serum-free mitogenesis assay, dexamethasone (25 to 500 nM) caused a dose-dependent decrease in [3H]thymidine incorporation by MG-63 cells in culture, reaching 40% inhibition of cell proliferation at a concentration of 250 nM. Similarly, the stimulatory effect of TSP (500 ng/ml) on proliferation of MG-63 cells was totally abolished in the presence of dexamethasone (250 nM). In situ hybridization indicated that TSP mRNA level in dexamethasone-treated MG-63 cells decreased compared to quiescent cells. As judged by fluorescence-activated cell sorting analysis, dexamethasone treatment of MG-63 cells resulted in a 50 to 70% decrease in TSP cell surface expression compared to quiescent cells. Secretion of TSP in the culture fluid of dexamethasone-treated MG-63 cells also decreased by 40% while, under similar experimental conditions, a 180% increase in alkaline phosphatase activity was observed in dexamethasone-treated cells. Because glucocorticoids induce osteoporosis in vivo and reduce proliferation of osteoblasts in vitro, our results argue for an important role of TSP during bone formation.