The Wnt family of secreted glycoproteins plays an integral role in embryonic development and differentiation. To explore the role of Wnt's in one aspect of differentiation, namely osteogenesis, we employed a retroviral gene transfer approach to express Wnt-3a in the multipotent murine embryonic mesenchymal cell line C3H10T1/2. We found that expression of Wnt-3a in these cells had a significant, positive effect on cell growth in serum-containing medium, in that the cells grew to very high densities compared to the control cells. Additionally, apoptosis was markedly inhibited by Wnt-3a. However, when the cells were grown in serum-deficient medium, the Wnt-3a-expressing cells arrested efficiently in G1 phase, indicating that serum growth factors were needed in addition to Wnt-3a for enhanced proliferation. Wnt-3a-expressing cells exhibited high levels of alkaline phosphatase gene expression and enzymatic activity, but did not show any matrix mineralization. Unexpectedly, basal expression of bone sialoprotein, osteocalcin, and osteopontin were markedly inhibited by Wnt-3a, as were other known target genes of Wnt-3a, such as Brachyury, FGF-10, and Cdx1. When Wnt-3a-expressing cells were treated with osteogenic supplements in the presence of BMP-2, alkaline phosphatase gene expression and activity were further elevated. Additionally, BMP-2 was able to reverse the inhibitory effect of Wnt-3a on osteocalcin and osteopontin gene expression. These results indicate that while Wnt-3a represses basal expression of some osteogenic genes, this repression can be partially reversed by BMP-2. Finally, the enhanced gene expression of alkaline phosphatase induced by Wnt-3a could be effectively suppressed by the combined action of dexamethasone and 1,25-dihydroxyvitamin D(3). These data show for the first time that Wnt-3a has an unusual effect on multipotential embryonic cells, in that it enhances cellular proliferation and expression of alkaline phosphatase, while it represses most other marker genes of osteogenic differentiation.