We have previously shown that protein S, a vitamin K-dependent protein, is a bone matrix component synthesized and secreted by osteoblasts. Because protein S is a cofactor of protein C in inhibiting factor Va and VIIIa, we have looked for the presence of the proteins related to the anticoagulant protein C system in human MG 63 osteosarcoma cells and in human adult osteoblast-like cells. Using immunoblotting, we have shown that protein C, factor V, and C4b binding protein are not secreted by these cells. We have shown by enzyme-linked immunoassay, immunocytochemistry, and immunoprecipitation of labeled proteins that thrombomodulin, a transmembrane glycoprotein involved with thrombin in the activation of protein C, is present at the cell surface of osteoblasts. Moreover, using a protein C activation system where thrombin and protein C are added to the cells, we have shown that protein C could be activated at the osteoblast cell surface. This activation of exogenous protein C, reflecting the activity of thrombomodulin, as well as the expression of the thrombomodulin antigen, is regulated by some bone resorption-enhancing factors. 1,25-dihydroxyvitamin D3 and retinoic acid increase thrombomodulin expression and activity in a dose-dependent manner whereas tumor necrosis factor alpha and interleukin .1 decrease these parameters. Because thrombomodulin is known to inhibit single-chain urokinase-type plasminogen activator, a molecule present in the osteoblast microenvironment, these findings suggest that thrombomodulin could play a role in the regulation of bone resorption by modulating the plasmin system.