Lymphocytes are implicated in the pathogenesis of bone disease in chronic inflammation, osteoporosis, transplantation and osteopetrosis. The effects of lymphocytes and lymphocyte-conditioned medium on bone-resorbing activity and osteoclast function have been well studied, but there are few studies of the effects of LCM on bone formation and osteoblast function. The effects of LCM on the function of the MG-63 human osteosarcoma cell line were studied, which, when stimulated with 1,25-(OH)2D3, demonstrates many of the properties of the mature human osteoblast. Lymphocytes contain oestrogen receptors and the model was also used to test the hypothesis that the effects of oestrogen on bone cells may be mediated indirectly via lymphokines. Lymphokines were measured by ELISA in human lymphocyte conditioned medium (LCM) collected following incubation of mixed lymphocytes with or without stimulation for 72 h. Unstimulated LCM increased proliferation of MG-63 cells and this increase was not affected by neutralization of interleukin 1 (IL-1), IL-3, IL-6, granulocyte-macrophage colony-stimulating factor (GM-CSF), tumour necrosis factor (TNF), lymphotoxin alpha, or interferon gamma (IFN-gamma). Phytohaemagglutinin-stimulated LCM decreased proliferation of MG-63 cells, as well as induced expression of IL-6 mRNA, increased alkaline phosphatase production, and inhibited osteocalcin production. The decrease in proliferation was abolished by neutralization of IFN-gamma but was unaffected by neutralization of IL-1, IL-2, IL-3, IL-4, IL-6, GM-CSF, TNF, or lymphotoxin alpha. Neutralization of IFN-gamma in stimulated LCM also partially inhibited the increase in alkaline phosphatase production but had no effects on the decrease in osteocalcin production. Although oestrogen inhibited lymphocyte proliferation, the effects of LCM collected from lymphocytes in the presence of oestrogen on MG-63 cell proliferation and function was no different than the effects of LCM collected in the absence of oestrogen. LCM has multiple effects on MG-63 cell function and gene expression. Lymphocyte stimulation during the preparation of LCM further modulates these effects. Although partially mediated by IFN-gamma, the effects of LCM on these cells cannot be completely explained by individual component lymphokines. This may have implications for understanding the pathophysiology of bone loss in inflammatory disorders as well as possible feedback loops of locally generated cytokines in bone.