X-linked hypophosphatemia (XLH) is caused by inactivating mutations of PEX, an endopeptidase of uncertain function. This defect is shared by Hyp mice, the murine homologue of the human disease, in which a 3' Pex deletion has been documented. In the present study, we report that immortalized osteoblasts derived from the simian virus 40 (SV40) transgenic Hyp mouse (TMOb-Hyp) have an impaired capacity to mineralize extracellular matrix in vitro. Compared with immortalized osteoblasts from the SV40 transgenic normal mouse (TMOb-Nl), osteoblast cultures from the SV40 Hyp mouse exhibit diminished 45Ca accumulation into extracellular matrix (37 +/- 6 vs. 1,484 +/- 68 counts . min-1 . microgram protein-1) and reduced formation of mineralization nodules. Moreover, in coculture experiments, we found evidence that osteoblasts from the SV40 Hyp mouse produce a diffusible factor that blocks mineralization of extracellular matrix in normal osteoblasts. Our findings indicate that abnormal PEX in osteoblasts is associated with the accumulation of a factor(s) that inhibits mineralization of extracellular matrix in vitro.