Osteoblast development is a complex process involving the expression of specific growth factors and regulatory proteins that control cell proliferation, differentiation, and maturation. In this study, we used the rat mutation, osteopetrosis (op), to examine differences in skeletal gene expression between mutant op and normal littermates. Total RNA isolated from long bone and calvaria was used as a template for mRNA differential display. One of many cDNAs that were selectively expressed in either normal or mutant bone was cloned and sequenced and found to share some homology to the human nmb and Pmel 17 genes. This novel cDNA was named osteoactivin. Osteoactivin has an open reading frame of 1716 bp that encodes a protein of 572 amino acids with a predicted molecular weight of 63.8 kD. Protein sequence analysis revealed the presence of a signal peptide and a cleavage site at position 23. The protein also has thirteen predicted N-linked glycosylation sites and a potential RGD integrin recognition site at position 556. Northern blot analysis confirmed that osteoactivin was 3- to 4-fold overexpressed in op versus normal bone. RT-PCR analysis showed that osteoactivin is most highly expressed in bone compared with any of the other non-osseous tissues examined. In situ hybridization analysis of osteoactivin in normal bone revealed that it is primarily expressed in osteoblasts actively engaged in bone matrix production and mineralization. In primary rat osteoblast cultures, osteoactivin showed a temporal pattern of expression being expressed at highest levels during the later stages of matrix maturation and mineralization and correlated with the expression of alkaline phosphatase and osteocalcin. Our findings show that osteoactivin expression in bone is osteoblast-specific and suggest that it may play an important role in osteoblast differentiation and matrix mineralization. Furthermore, osteoactivin overexpression in op mutant bone may be secondary to the uncoupling of bone resorption and formation resulting in abnormalities in osteoblast gene expression and function.