Bone marrow contains multipotential stromal stem cells that can differentiate into fibroblastic, osteogenic, adipocytic, and other cell lines. There is evidence for a considerable degree of plasticity in the differentiation of these different marrow stromal lines. Additional studies have been undertaken investigating the effects of basic fibroblastic growth factor (bFGF), transforming growth factor beta (TGF beta), and dexamethasone on the proliferation and differentiation of rat marrow stromal cells in in vitro cultures. Cell proliferation was stimulated by bFGF and inhibited by dexamethasone and TGF beta. Alkaline phosphatase activity was stimulated by TGF beta and dexamethasone, whereas the expression of the enzyme was inhibited by bFGF. Adipogenesis was induced in cultures containing dexamethasone, but this was depressed by the presence of TGF beta. These observations support the authors' previous hypothesis that there may be an inverse relationship between the differentiation of osteogenic and adipocytic cell lines. The results are relevant to osteoporosis and the aging skeleton, where excess marrow fat is a common feature, and have implications for the pathology of bone and marrow.