We investigated the regulation of collagenase-3 expression in normal, differentiating rat osteoblasts. Fetal rat calvarial cell cultures showed an increase in alkaline phosphatase activity reaching maximal levels between 7-14 days postconfluence, then declining with the onset of mineralization. Collagenase-3 mRNA was just detectable after proliferation ceased at day 7, increased up to day 21, and declined at later ages. Postconfluent cells maintained in nonmineralizing medium expressed collagenase-3 but did not show the developmental increase exhibited by cells switched to mineralization medium. Cells maintained in nonmineralizing medium continued to proliferate; cells in mineralization medium ceased proliferation. In addition, collagenase-3 mRNA was not detected in subcultured cells allowed to remineralize. These results suggest that enhanced accumulation of collagenase-3 mRNA is triggered by cessation of proliferation or acquisition of a mineralized extracellular matrix and that other factors may also be required. After initiation of basal expression, parathyroid hormone (PTH) caused a dose-dependent increase in collagenase-3 mRNA. Both the cyclic adenosine monophosphate (cAMP) analogue, 8-bromo-cAMP (8-Br-cAMP), and the protein kinase C (PKC) activator, phorbol myristate acetate, increased collagenase-3 expression, while the calcium ionophore, ionomycin, did not, suggesting that PTH was acting through the protein kinase A (PKA) and PKC pathways. Inhibition of protein synthesis with cycloheximide caused an increase in basal collagenase-3 expression but blocked the effect of PTH, suggesting that an inhibitory factor prevents basal expression while an inductive factor is involved with PTH action. In summary, collagenase-3 is expressed in mineralized osteoblasts and cessation of proliferation and initiation of mineralization are triggers for collagenase-3 expression. PTH also stimulates expression of the enzyme through both PKA and PKC pathways in the mineralizing osteoblast.