Transforming growth factor-beta (TGF-beta) is a critical regulator of bone development and remodeling. TGF-beta must be activated from its latent form in order to signal. Thrombospondin-1 (TSP1) is a major regulator of latent TGF-beta activation and TSP1 control of TGF-beta activation is critical for regulation of TGF-beta activity in multiple diseases. Bone marrow-derived mesenchymal stem cells (MSCs) have osteogenic potential and they participate in bone remodeling in injury and in response to tumor metastasis. Since both TSP1 and TGF-beta inhibit osteoblast differentiation, we asked whether TSP1 blocks osteoblast differentiation of MSCs through its ability to stimulate TGF-beta activation. TSP1 added to human bone marrow-derived MSCs under growth conditions increases active TGF-beta. Cultured MSCs express TSP1 and both TSP1 expression and TGF-beta activity decrease during osteoblast differentiation. TSP1 and active TGF-beta block osteoblast differentiation of MSCs grown in osteogenic media as measured by decreased Runx2 and alkaline phosphatase expression. The inhibitory effect of TSP1 on osteoblast differentiation is due to its ability to activate latent TGF-beta, since a peptide which blocks TSP1 TGF-beta activation reduced TGF-beta activity and restored osteoblast differentiation as measured by increased Runx2 and alkaline phosphatase expression. Anti-TGF-beta neutralizing antibody also increased alkaline phosphatase expression in the presence of TSP1. These studies show that TSP1 regulated TGF-beta activity is a critical determinant of osteoblast differentiation. (c) 2012 Elsevier Inc. All rights reserved.