IGF-I and -II play an important role in regulating bone formation. Bone marrow stromal cells, particularly those with osteoblast-like features, may act in concern with osteoblasts to increase IGF-I and -II levels in the bone microenvironment. Local bioavailability of IGFs, however, is modulated by IGF binding proteins (IGFBPs). We have previously demonstrated that murine TC-1 stromal cells constitutively secrete IGF-I and IGFBPs. In the present study, we determined the phenotype of these cells and used them as a model to explore the effect of IGFBPs on IGF-I-induced mitogenesis. The effect of IGF-I on IGFBPs expressed by TC-1 was also determined. When grown under conditions that promote osteogenic differentiation, TC-1 cells showed high alkaline phosphatase activity and mRNA levels, weakly expressed osteocalcin mRNA, and formed mineralized bone-like nodules. TC-1 cells expressed IGF-I and IGF-II mRNAs, while other stromal phenotypes preferentially expressed IGF-I. IGF-I stimulated TC-1 DNA synthesis in a dose-dependent manner and this effect was inhibited by recombinant IGFBP-1 and -4. Since IGF-I may regulate IGFBP production, the effect of IGF-I on IGFBPs expressed by TC-1 cells was determined. IGF-I increased the abundance of IGFBP-3, -4 and -5 in TC-1 conditioned medium, this correlated with induction of IGFBP-3 mRNA, but not with that of IGFBP-4 or -5 mRNAs. The findings demonstrate that most stromal cells express IGF-I which may act in an autocrine and/or paracrine fashion. The local effects of IGF-I, however, may be blocked by IGFBP-1 or -4. IGF-I regulates the relative abundance of IGFBPs in stromal cells which, in turn, may influence IGF-I-mediated effects on bone remodeling.