Circulating 1 alpha,25-dihydroxyvitamin D(3) (1,25D) derives from renal conversion of 25-hydroxyvitamin D(3) (25D), by the 25D 1 alpha-hydroxylase (CYP27B1). Blood 25D levels, but not 1,25D levels, are the best indicator of vitamin D status and predict fracture risk in the elderly. We examined the extent to which osteoblasts can metabolize 25D. Well-characterized human primary osteoblasts and osteosarcoma (OS) cell lines were examined for the expression and regulation of genes associated with vitamin D metabolism, using real-time PCR. Primary osteoblasts and OS cell lines were found to express CYP27B1 mRNA and secreted detectable 1,25D in response to 25D. Of the OS cell lines tested, HOS expressed the most CYP27B1 mRNA and secreted the highest levels of 1,25D. All osteoblastic cells examined up-regulated expression of the catabolic regulator of 1,25D, the 25-hydroxyvitamin D-24-hydroxylase (CYP24), when incubated with either 1,25D or 25D. Exposure to physiological levels of 25D resulted in up-regulated transcription of the 1,25D responsive genes, osteocalcin (OCN), osteopontin (OPN) and RANKL. Specific knockdown of CYP27B1 in HOS cells using siRNA resulted in up to 80% reduction in both 1,25D secretion and the transcription of OCN and CYP24, strongly implying that the 25D effect in osteoblasts is preceded by conversion to 1,25D. Incubation with 25D, like 1,25D, inhibited primary osteoblast proliferation and promoted in vitro mineralization. Finally, we detected expression by osteoblasts of receptors for vitamin D binding protein (DBP), cubilin and megalin, suggesting that osteoblasts are able to internalize DBP-25D complexes in vivo. Together, our results suggest that autocrine, and perhaps paracrine, pathways of vitamin D(3) metabolism may regulate key osteoblast functions independently of circulating, kidney derived 1,25D. Our results are therefore consistent with the reported benefits of maintaining a healthy vitamin D status in the elderly to reduce the risk of fractures.