ABSTRACT: BACKGROUND: Induction of osteoblast differentiation by paracrine Sonic hedgehog (Shh) signaling may be a mechanism through which Shh-expressing prostate cancer cells initiate changes in the bone microenvironment and promote metastases. A hallmark of osteoblast differentiation is the formation of matrix whose predominant protein is type 1 collagen. We investigated the formation of a collagen matrix by osteoblasts cultured with prostate cancer cells, and its effects on interactions between prostate cancer cells and osteoblasts. RESULTS: In the presence of exogenous ascorbic acid (AA), a co-factor in collagen synthesis, mouse MC3T3 pre-osteoblasts in mixed cultures with human LNCaP prostate cancer cells or LNCaP cells modified to overexpress Shh (LNShh cells) formed collagen matrix with distinct fibril ultrastructural characteristics. AA increased the activity of alkaline phosphatase and the expression of the alkaline phosphatase gene Akp2, markers of osteoblast differentiation, in MC3T3 pre-osteoblasts cultured with LNCaP or LNShh cells. However, the AA-stimulated increase in Akp2 expression in MC3T3 pre-osteoblasts cultured with LNShh cells far exceeded the levels observed in MC3T3 cells cultured with either LNCaP cells with AA or LNShh cells without AA. Therefore, AA and Shh exert a synergistic effect on osteoblast differentiation. We determined whether the effect of AA on LNShh cell-induced osteoblast differentiation was mediated by Shh signaling. AA increased the expression of Gli1 and Ptc1, target genes of the Shh pathway, in MC3T3 pre-osteoblasts cultured with LNShh cells to at least twice their levels without AA. The ability of AA to upregulate Shh signaling and enhance alkaline phosphatase activity was blocked in MC3T3 cells that expressed a dominant negative form of the transcription factor GLI1. The AA-stimulated increase in Shh signaling and Shh-induced osteoblast differentiation was also inhibited by the specific collagen synthesis inhibitor 3,4-dehydro-L-proline. CONCLUSIONS: Matrix collagen, formed by osteoblasts in the presence of AA, potentiates Shh signaling between Shh-expressing prostate cancer cells and osteoblasts. Collagen and Shh signaling exert a synergistic effect on osteoblast differentiation, a defining event in prostate carcinoma bone metastasis. Investigations into paracrine interactions among prostate cancer cells, osteoblasts, and osteoblast-synthesized matrix proteins advance our understanding of mechanisms contributing to prostate cancer bone metastasis.