In giant cell tumour of bone (GCT), mononuclear stromal cells, which represent the neoplastic component of this lesion, regulate the formation of multinucleated osteoclast-like giant cells which are the characteristic hallmark of this tumour. However, the origin of stromal tumour cells has not yet been clearly defined. In this study, we evaluated several osteoblast markers including collagen type I, bone sialoprotein (BSP), osteonectin and osteocalcin in GCT using immunohistochemical techniques. Amongst the 13 GCT specimens and 7 GCT stromal cell (GCTSC) cultures studied, majority of the GCTSC synthesized type I collagen, BSP and osteonectin proteins but did not produce the differentiated osteoblast marker, osteocalcin. We further examined the regulation of several important osteogenic genes such as Cbfa-1, osterix and osteocalcin, and regulation of ALP activity in GCTSC in culture by bone morphogenetic protein 2 (BMP-2). Real-time PCR analysis indicated that Cbfa-1, osterix and osteocalcin mRNA were present in primary cultures of GCTSC. The addition of BMP-2 upregulated Cbfa-1 and osterix gene expression within 12 h and the enhancement was still observed at 24 h. ALP activity was minimal in untreated GCTSC in cultures. The number of ALP-positive GCTSC was significantly increased following treatment with BMP-2 or combinations with beta-glycerophosphate and ascorbic acid. In contrast, BMP enhancement of osterix mRNA level and ALP activity was also seen in SaOS2 osteoblast-like cells, but not in the primary culture of normal human skin fibroblasts. In summary, our data suggest that GCT stromal tumour cells may have an osteoblastic lineage and retain the ability to differentiate into osteoblasts.