Previous studies have indicated that lipopolysaccharide (LPS) from Gram-negative bacteria in plaque induces the release of prostaglandin E2 (PGE2), which promotes alveolar bone resorption in periodontitis, and that tobacco smoking might be an important risk factor for the development and severity of periodontitis. We determined the effect of nicotine and LPS on alkaline phosphatase (ALPase) activity, PGE2 production, and the expression of cyclooxygenase (COX-1, COX-2), PGE2 receptors Ep1–4, and macrophage colony stimulating factor (M-CSF) in human osteoblastic Saos-2 cells. The cells were cultured with 10−3 M nicotine in the presence of 0, 1, or 10 μg/ml LPS, or with LPS alone. ALPase activity decreased in cells cultured with nicotine or LPS alone, and decreased further in those cultured with both nicotine and LPS, whereas PGE2 production significantly increased in the former and increased further in the latter. By itself, nicotine did not affect expression of COX-1, COX-2, any of the PGE2 receptors, or M-CSF, but when both nicotine and LPS were present, expression of COX-2, Ep3, Ep4, and M-CSF increased significantly. Simultaneous addition of 10−4 M indomethacin eliminated the effects of nicotine and LPS on ALPase activity, PGE2 production, and M-CSF expression. Phosphorylation of protein kinase A was high in cells cultured with nicotine and LPS. These results suggest that LPS enhances the production of nicotine-induced PGE2 by an increase in COX-2 expression in osteoblasts, that nicotine-LPS-induced PGE2 interacts with the osteoblast Ep4 receptor primarily in autocrine or paracrine mode, and that the nicotine-LPS-induced PGE2 then decreases ALPase activity and increases M-CSF expression.