We studied the osteoblastic abnormalities resulting from activating mutation of the Gs alpha gene in two patients with McCune-Albright syndrome and one patient with monostotic fibrous dysplasia. Histomorphometric analysis of dysplastic lesions showed a low number of differentiated osteoblasts along the bone surface and numerous immature alkaline phosphatase-positive mesenchymal cells actively depositing a woven bone matrix. Osteoblastic cells isolated from dysplastic bone lesions expressed a missense mutation in the Gs alpha gene in position 201 and showed increased intracellular basal cyclic adenosine 3',5'-monophosphate levels compared with normal cells isolated from a noninvolved area in the same patient. Cell proliferation evaluated by DNA synthesis was two-fold to threefold greater in osteoblastic cells expressing the mutation compared with normal cells from the same patient and was greater in cells isolated from more severe than less severe fibrotic lesions. In contrast, the synthesis of osteocalcin, a marker of mature osteoblasts, was lower in osteoblastic cells expressing the Gs alpha mutation compared with normal cells from the same patient and was lower in cells isolated from severe compared with less severe fibrotic lesions, indicating that the increased growth in mutated osteoblastic cells was associated with reduced cell differentiation. The results show that activating mutation of Gs alpha in osteoblastic cells leads to constitutive activation of adenylate cyclase, increased cell proliferation, and inappropriate cell differentiation, resulting in overproduction of a disorganized fibrotic bone matrix in polyostotic and monostotic fibrous dysplasia.