Human foreskin keratinocytes in culture produce 1,25-dihydroxycholecalciferol (1,25-(OH)2D3) and 24,25-dihydroxycholecalciferol (24,25-(OH)2D3) from 25-hydroxycholecalciferol (25-(OH)D3). The production of 1,25-(OH)2D3 by these cells correlated with the early events of differentiation such as expression of transglutaminase activity and the levels of a precursor protein for the cornified envelopes, involucrin. In contrast, the increased production of 24,25-(OH)2D3, as 1,25-(OH)2D3 production declined, correlated with the terminal differentiation marker, cornified envelope formation. Exogenous 1,25-(OH)2D3 (10(-11)-10(-9) M) inhibited the 1-alpha-hydroxylase at all stages of growth of these cells. Keratinocytes in culture expressed receptors for 1,25-(OH)2D3 which had similar sedimentation behavior in sucrose density gradients as chick intestinal cytosol receptors. Cells in early stages of growth (preconfluent and confluent) contained higher numbers of receptors (26-27 fmol/mg protein) than post-confluent cells. The dissociation constant (237-278 pM) of these receptors for 1,25-(OH)2D3 was not consistently altered by differentiation. Since 1,25-(OH)2D3 is a potent stimulator of cell differentiation in a variety of systems including the epidermis, our results suggest the possibility that endogenous 1,25-(OH)2D3 production may participate in the differentiation of keratinocytes in culture and, perhaps, in vivo.