PTH is a major systemic regulator of bone metabolism and plays an important role in both bone formation and resorption. PTH either inhibits or stimulates osteoblastic cell proliferation depending on the model that is studied. We analyzed the cell cycle of the UMR-106 cell line, a relatively differentiated osteoblastic osteogenic sarcoma line in which PTH is known to inhibit proliferation but the mechanism of action is unknown. PTH decreased the proportion of cells in S phase and increased the number of G1 phase cells. We examined the effect of PTH on the regulators of the G1 phase cyclin-dependent kinases and found that PTH increased p27(Kip1), but not p21(Cip1), levels. This effect was mimicked by 8-bromo-cAMP, but not by phorbol 12-myristate 13-acetate. The protein kinase A inhibitor KT5720 abolished the effect of PTH on the increase in p27(Kip1) expression. PTH increased CDK2-associated p27(Kip1) without affecting the levels of CDK2. CDK2 activity was down-regulated by both PTH and 8-bromo-cAMP treatment. These data suggest that PTH blocks entry of cells into S phase and inhibits cell proliferation as the consequence of an increase in p27(Kip1), which is mediated through the protein kinase A pathway. The inhibition of G1 cyclin- dependent kinases by p27(Kip1) could cause a reduction of phosphorylation of key substrates and inactivation of transcription factors essential for entry into S phase. The inhibition of cell cycle progression through PKA-mediated p27(Kip1) induction might play an important role in PTH-induced differentiation of osteoblasts.