Prostaglandin E2 (PGE2) can stimulate collagen synthesis in bone at low concentrations or in the presence of cortisol. Moreover, cortisol inhibits and PGE2 stimulates the production of insulin-like growth factor (IGF-I) in cultured osteoblastic cells. Therefore, we examined the role of IGF-I in the response to PGE2. In 96-h fetal rat calvarial organ cultures, PGE2 increased, and cortisol and indomethacin decreased the medium IGF-I concentration, suggesting that both exogenous and endogenous PGs regulate IGF-I production. In the presence of cortisol, the stimulatory effects of PGE2 on medium IGF-I and incorporation of [3H] proline into collagenase-digestible protein were highly correlated (r = 0.95). When exogenous IGF-I (30 nM) was added, the stimulatory effect of PGE2 was abrogated in the absence, but not the presence, of cortisol. When we added IGF-binding proteins, which blocked the effects of IGF-I and IGF-II, collagenase-digestible protein labeling was decreased in control and cortisol-treated cultures, whereas the stimulatory effect of PGE2 was reduced, but not abrogated. We conclude that endogenous IGFs play a role in maintaining bone formation in cultured fetal rat calvariae and may mediate in part the anabolic response to PGE2. However, the PGE2 response probably involves additional IGF-independent pathways.