A series of subclonal cell lines with high or low differentiation/mineralization potential after growth in the presence of ascorbic acid (AA) were derived from murine MC3T3-E1 cells. Subclones were characterized in terms of their ability to mineralize a collagenous extracellular matrix both in vitro and in vivo and express osteoblast-related genes. When compared with nonmineralizing cells, mineralizing subclones selectively expressed mRNAs for the osteoblast markers, bone sialoprotein (BSP), osteocalcin (OCN), and the parathyroid hormone (PTH)/parathyroid hormone-related protein (PTHrP) receptor. In contrast, alkaline phosphatase mRNA was present in certain nonmineralizing as well as mineralizing subclones, suggesting that its expression may be subject to different controls from other osteoblast markers. Only highly differentiating subclones exhibited strong AA-dependent induction of a transiently transfected OCN promoter-luciferase reporter gene, indicating that there was a good correlation between mRNA levels and transcriptional activity. Consistent with its postulated role in biomineralization, BSP as measured by Western blotting was only present in mineralizing subclones. After implantation into immunodeficient mice, highly differentiating subclones formed bone-like ossicles resembling woven bone, while poorly differentiating cells only produced fibrous tissue. Interestingly, subclones with both high and low differentiation potential produced similar amounts of collagen in culture and expressed comparable basal levels of mRNA encoding Osf2/Cbfa1, an osteoblast-related transcription factor. Although some strongly differentiating cells exhibited a modest AA-dependent up-regulation of Osf2/Cbfa1 mRNA, there was no clear relationship between levels of this message and induction of mRNAs for other differentiation markers. Thus, the mere presence of Osf2/Cbfa1 in a subclone was not sufficient for osteoblast differentiation. These subclones will be very useful for studying critical events in osteoblast differentiation and mineralization. (J Bone Miner Res 1999;14:893-903)