The effects of prostaglandin E2 (PGE2) were histomorphometrically evaluated in cancellous bone of the axial skeleton of ovariectomized, osteopenic rats. Four months following bilateral ovariectomy (OVX) and sham-ovariectomy (SHAM) at 3 months of age, rats received daily subcutaneous injections of PGE2 at 0, 0.3, 1.0, 3.0 and 6.0 mg/kg/day for 30 days. The undecalcified fourth lumbar vertebral bodies (LVB) were processed for static and dynamic bone histomorphometry. The OVX rats possessed a slightly osteopenic LVB (17% vs. 24% cancellous bone mass). In rats given PGE2 at 3 and 6 mg/kg/day for 30 days, bone turnover, lamellar bone mass, and formation of new woven bone trabeculae were increased. Observations supported the conclusion that PGE2 activates bone modeling and remodeling, and shifts bone balance in favor of formation. In OVX rats given 6 mg PGE2/kg/day, cancellous bone mass and trabecular numbers were restored to levels found in untreated SHAM rats. Cancellous bone mass in the LVB of SHAM rats given 3 and 6 mg PGE2/kg/day increased by 16% and 30% over that of control rats. In addition, PGE2 stimulated longitudinal bone growth in both OVX and SHAM rats, a response that differed from male rats.