Tumor necrosis factor-alpha (TNF) is a pro-inflammatory cytokine with a profound role in many skeletal diseases. The cytokine has been described as a mediator of bone loss in osteolysis and other inflammatory bone diseases. In addition to its known bone resorptive action, TNF reduces bone formation by inhibiting osteoblast differentiation. Using primary and transformed osteoblastic cells, we first document that TNF inhibits expression of alkaline phosphatase and matrix deposition, both considered markers of osteoblast differentiation. The effects are dose- and time-dependent. Core-binding factor Al (cbfa1) is a transcription factor critical for osteoblast differentiation, and we show here that it is activated by the osteoblast differentiation agent, beta-glycerophosphate. Therefore, we investigated whether the inhibitory effects of TNF were associated with altered activity of this transcription factor. Using retardation assays, we show that TNF significantly inhibits cbfa1 activation by beta-glycerophosphate, manifested by reduced DNA-binding activity. Next, we turned to determine the signaling pathway by which TNF inhibits osteoblast differentiation. Utilizing animals lacking individual TNF receptors, we document that TNFr1 is required for transmitting the cytokine's inhibitory effect. In the absence of this receptor, TNF failed to impact all osteoblast differentiation markers tested. In summary, TNF blocks expression of osteoblast differentiation markers and inhibits beta-glycerophosphate-induced activation of the osteoblast differentiation factor cbfa1. Importantly, these effects are mediated via a mechanism requiring the TNF type-1 receptor. (C) 2003 Elsevier Science Ltd. All rights reserved.