Retinoic acid has a specific role in cellular differentiation and is believed to act by regulating the transcription of specific genes. In the present work, evidence is provided to show that alkaline phosphatase (ALP) gene expression is mediated by retinoic acid in a model clonal cell line (UMR 201) derived from rat neonatal calvaria. These cells have the characteristics of relatively undifferentiated mesenchymal cells with a very low basal ALP activity which is dramatically increased by retinoic acid. Messenger RNA for ALP was clearly demonstrated when the cells were treated with 1 μm retinoic acid for 24 h. Recombinant human tumour necrosis factor-α (recombinant TNF-α) interacted with retinoic acid to potentiate the rise in ALP activity, although recombinant TNF-α alone had no effect. The potentiation of retinoic acid-induced ALP activity was correlated with an increased amount of mRNA for ALP with the combined treatment. By observing the rate of decay of mRNA for actin and ALP, we were able to demonstrate that the interaction between retinoic acid and recombinant TNF-α modulated the steady state of ALP mRNA. The mode of action of recombinant TNF-α may serve as a model for other paracrine regulators of cell function.