The binding of prostaglandin E2 (PGE2) to bone cells was studied to provide direct evidence for the existence of specific receptors in bone. Bone cells were isolated by collagenase digestion of fetal and newborn rat calvaria. Isolated cells were incubated with 3H-PGE2 and collected on Millipore filters. Specific binding was determined by subtracting the binding that occurred with 10(-6) M non-radioactive PGE2 and 3H-PGE2 from that with 3H-PGE2 alone. With heterogeneous cell preparations and at PGE2 concentrations from 10(-9) - 1.7 X 10(-8) M at 37 degrees C, specific binding reached steady state within 10 min. Bound 3H-PGE2 was displaced by the addition of increasing amounts of unlabeled PGE2. Inhibition of PGE2 binding was observed with PGE1 and the endoperoxide analog, U44069, but not with PGF2 alpha, a lipopolysaccharide, or 13,14-dihydro 15-keto PGE2. Studies with bone cell populations, obtained by sequential digestions, indicated that an osteoclastic population binds 30-fold more PGE2 than osteoblastic cells. Scatchard analyses revealed that the osteoclastic cells have an affinity constant for PGE2 binding similar to that obtained with heterogeneous populations. However, the PGE2 binding capacity in this osteoclastic population was fivefold greater than in the heterogeneous population. The osteoclastic population responded with an increase in cyclic AMP to lower concentrations of PGE2 than the osteoblastic populations. These studies suggest that differences in the binding capacity of PGE2 receptors exist among bone cell-types and that these differences are reflected in the cellular cyclic AMP response.