Microsomes prepared from embryonic chick bone contain a vitamin K-dependent carboxylating system which post-translationally converts glutamic acid residues in peptides to gamma-carboxyglutamic acid (gamma-CGlu). Glutamic acid residues in both endogenous chick bone microsomal protein and in the synthetic peptide Phe Leu-Glu-Glu-Val are gamma-carboxylated. These data suggest that bone cells have the capacity for de novo gamma-CGlu synthesis and may be responsible for synthesis of osteocalcin, the major gamma-CGlu protein in bone.