Direct cell-cell interactions are fundamental for tissue development and differentiation. We have studied the expression and function of cadherins in human osteoblasts during in vitro differentiation. Using reverse transcription-polymerase chain reaction and mRNA hybridization, we found that human trabecular bone osteoblasts (HOBs), osteoprogenitor marrow stromal cells (BMCs), and the osteogenic sarcoma lines, SaOS-2 and MG-63, expressed mRNA for cadherin-11 (C11) and N-cadherin (N-cad). HOBs and BMCs also expressed low levels of cadherin-4 (C4) mRNA. C11 was the most abundant cadherin protein present in human osteoblasts, and its expression was unaffected by bone morphogenetic protein-2 (BMP-2) treatment of either BMCs or HOBs. Likewise, N-cad mRNA did not change during BMP-2 incubation. Conversely, C4 protein, undetectable in transformed cell lines, was down-regulated by BMP-2 treatment of normal cells. Both C11 and C4 were localized to sites of cell-cell contact in both HOBs and BMCs, colocalized with beta-catenin, and bands corresponding to cadherins were coimmunoprecipitated by a beta-catenin antibody, findings indicative of functional cadherins. A decapeptide containing the HAV motif of human N-cad partially inhibited Ca2+-dependent cell-cell adhesion and completely prevented BMP-2-induced stimulation of alkaline phosphatase activity by BMCs. Thus, human osteoblasts and their progenitor cells express a repertoire of multiple cadherins. Cadherin-mediated cell-to-cell adhesion is critical for normal human osteoblast differentiation.