Beyond a pivotal role in neoplastic transformation and malignant progression, NFkappaB is intricately involved in bone biology, pointed up by the osteopetrotic phenotype of NFkappaB (p50-p52) double knock-out mice. Osteopetrosis results from intrinsic defects in osteoclastogenesis, loss of osteoclast bone resorptive activity and, questionably, increased osteoblast activity (bone matrix apposition and mineralization). We here report that inhibition of NFkappaB signaling activity in Saos-2 cells results in a marked decrease in cellular proliferation, assessed by the incorporation of radioactive thymidine into cellular DNA. Decreased cellular proliferation was accompanied by the induction of bone morphogenic proteins (BMP) 4, 7, and the osteoblast specific transciption factor, Cbfa1, heralding osteoblast differentiation, given the induction of alkaline phosphatase, osteopontin, and osteocalcin message levels and the attendant increase in matrix deposition and mineralization in vitro. These results point to the negative regulation of osteoblast differentiation by NFkappaB, with implications in the pathogenesis and progression of osteosarcomas.