The effect of 1,25-dihydroxyvitamin D3 [1,25-(OH)2D3], or calcitriol, on the proliferation and differentiation of Caco-2 cells was studied. Vitamin D receptor mRNA was detected in both pre- and postconfluent cells, and its abundance was unchanged with time and in response to calcitriol. 1,25- (OH)2D3-binding activity increased during differentiation, but there was no difference in binding between 1,25-(OH)2D3-treated and control cells. 1,25- (OH)2D3 caused a dose-dependent reduction in proliferation, as assessed by [3H]thymidine incorporation and DNA content. 1,25-(OH)2D3 significantly enhanced the normal rise in alkaline phosphatase activity during differentiation and increased alkaline phosphatase mRNA abundance. In contrast, 1,25-(OH)2D3 inhibited the normal rise in sucrase-isomaltase activity and the corresponding mRNA level, although the inhibition occurred after the initial period of cell differentiation (>10 days postplating). Morphological analysis demonstrated that by day 12 postplating, 1,25- (OH)2D3 increased the mean dome diameter and microvillus length and density. Although 1,25-(OH)2D3 decreases the proliferation of Caco-2 cells and enhances certain parameters of differentiation, not all brush-border hydrolases respond in a similar fashion, making it necessary to interpret with caution their individual use as markers of differentiation.