Osteoblasts are derived from precursor cells present in low frequency in the stromal element of bone marrow. Because of the lack of a practical procedure to isolate osteoblast precursors from early cultures of plastic adherent cells from bone marrow, previous studies of marrow stromal cells have been made in confluent cultures of bone marrow when the osteoblast (OB) precursors are already differentiated. Also these studies utilized cultures containing mixed populations of cells including hematopoietic cells. Thus we have employed a negative immunoselection procedure to remove contaminating hematopoietic cells and to isolate nearly homogeneous populations of early human stromal cells derived from the plastic-adherent mononuclear marrow cells cultured in the presence of serum. By reverse transcriptase polymerase chain reaction (RT-PCR) analysis for mRNA, and by immunocytochemical study for protein, we studied the sequential expression in culture of multiple markers of the osteoblast phenotype--alkaline phosphatase, osteopontin, parathyroid hormone receptor, types I and III procollagen, and osteocalcin--as well as lipoprotein lipase (LPL), a marker of the adipocyte phenotype. At an early stage of culture (7-9 days), human OB precursors formed colonies of variable sizes that expressed low levels of mRNA and protein concentrations of OB markers, and their concentration increased on growth to a confluent monolayer (approximately 14 days). LPL mRNA was expressed at high levels in the colony stage, and its level decreased upon confluency, suggesting a loss of potential for commitment to the adipocyte lineage. Interestingly, treatment with dexamethasone at 10(-8) M increased the expression for some of the osteoblast markers and for the LPL gene and was required for the deposition of mineralized matrix and for the formation of adipocytes containing cytoplasmic lipid droplets in confluent cultures. Cloned single early colonies were able to coexpress the osteoblast and adipocyte markers (as assessed by RT-PCR). Thus these immunoselected marrow stromal cells have the characteristics of authentic human osteoblast precursor cells which also are capable of differentiating into adipocytes.