This article describes the modulation, by extracellular collagen, of DNA and proteoglycan synthesis in articular chondrocytes stimulated with transforming growth factor-beta 1. Type-I and type-ii collagen, heat-denatured type-II collagen, and bovine serum albumin were each incorporated into alginate in increasing concentrations. Bovine articular chondrocytes were isolated and were resuspended in the alginate, yielding alginate beads with final extracellular protein concentrations of 0-1.5% (wt/vol) for the collagens and 0-2.5% (wt/vol) for bovine serum albumin. Cultures of beads were maintained for 7 days in basal Dulbecco's modified Eagle medium or in medium supplemented with 10 ng/ml transforming growth factor-beta 1. Subsequently, the synthesis of DNA and proteoglycan was measured by radiolabel incorporation methods with [S-35]sulfate and [H-3]thymidine, and the values were normalized to the DNA content. Transforming growth factor-pr stimulated the synthesis of both DNA and proteoglycan in a bimodal fashion. The presence of extracellular type-Il collagen increased the rate of DMA and proteoglycan synthesis in a dose-dependent fashion in cultures stimulated by transforming growth factor-beta 1, whereas heat-inactivated type-II collagen abrogated the effects observed with type-II collagen for synthesis of both DNA and proteoglycan. In contrast, the presence of extracellular type-I collagen caused a dose-dependent inhibition of synthesis of both DNA and proteoglycan in cultures stimulated with transforming growth factor-beta 1. Extracellular bovine serum albumin brought about a limited increase in synthesis rates? presumably by blocking nonspecific cytokine binding. These results suggest that type-II collagen has a specific role in chondrocyte regulation and serves to mediate the response of chondrocytes to transforming growth factor-beta 1.