Upon termination of bone matrix synthesis, osteoblasts either undergo apoptosis or differentiate into osteocytes or bone lining cells. In this study, we investigated the role of matrix metalloproteinases (MMPs) and growth factors in the differentiation of osteoblasts into osteocytes and in osteoblast apoptosis. The mouse osteoblast cell line MC3T3-E1 and primary mouse calvarial osteoblasts were either grown on two-dimensional (2-D) collagen-coated surfaces, where they morphologically resemble flattened, cuboidal bone lining cells, or embedded in three-dimensional (3-D) collagen gels, where they resemble dendritic osteocytes constituting a network of cells. When MC3T3-E1 osteoblasts were grown in a 3-D matrix in the presence of an MMP inhibitor (GM6001), the cell number was dose-dependently reduced by approximately 50%, whereas no effect was observed on a 2-D substratum. In contrast, the murine mature osteocyte cell line, MLO-Y4, was unaffected by GM6001 under all culture conditions. According to TUNEL assay, the osteoblast apoptosis was increased 2.5-fold by 10 microm GM6001. To investigate the mechanism by which MMPs mediate the survival of osteoblasts, we examined the effect of GM6001 on MC3T3-E1 osteoblasts in the presence of extracellular matrix components and growth factors, including tenascin, fibronectin, laminin, collagenase-cleaved collagen, gelatin, parathyroid hormone, basic fibroblast growth factor, vascular epidermal growth factor, insulin-like growth factor, interleukin-1, and latent and active transforming growth factor-beta (TGF-beta). Only active TGF-beta, but not latent TGF-beta or other agents tested, restored cell number and apoptosis to control levels. Furthermore, we found that the membrane type MMP, MT1-MMP, which is produced by osteoblasts, could activate latent TGF-beta and that antibodies neutralizing endogenous TGF-beta led to a similar decrease in cell number as GM6001. Whereas inhibitors of other protease families did not induce osteoblast apoptosis, an inhibitor of the p44/42 mitogen-activated protein kinase showed the same but non-synergetic effect as GM6001. These findings suggest that MMP-activated TGF-beta maintains osteoblast survival during trans-differentiation into osteocytes by a p44/42-dependent pathway.