To achieve new insights into the coordinate regulation of gene expression during osteoblast differentiation we utilized an approach involving global analysis of gene expression to obtain the identities of messenger RNAs (mRNAs) expressed using an established in vitro model of bone development. MC3T3-E1 osteoblast-like cells were induced to differentiate by the addition of β-glycerophosphate (β-GP) and ascorbic acid. RNA samples derived from induced and uninduced control MC3T3-E1 cells were used to prepare complementary DNA (cDNA) for serial analysis of gene expression (SAGE). A preliminary SAGE database was produced and used to prepare a hybridization array to further facilitate the characterization of changes in the expression levels of 92 of the SAGE-mRNA assignments after induction of osteoblast differentiation, specifically after 6 days and 14 days of ascorbate treatment. SAGE-array hybridization analysis revealed coordinate induction of a number of mRNAs including Rab24, calponin, and calcyclin. Levels of MSY-1, SH3P2, fibronectin, α-collagen, procollagen, and LAMP1 mRNAs, present at day 6 postinduction, were markedly reduced by day 14 postinduction. A number of unanticipated and potentially important developmental genes were identified including the transforming growth factor β (TGF-β) superfamily member Lefty-1. Lefty-1 transcript and translation product were found to be induced during the course of MC3T3-E1 cell differentiation. We present evidence, using transient transfection and antibody neutralization approaches, that Lefty-1 modulates the induction of alkaline phosphatase (ALP) after treatment of MC3T3-E1 cells with ascorbate and β-GP. These data should provide useful new information for future analysis of transcriptional events in osteoblast differentiation and mineralization.