Proenkephalin, a classically defined opioid encoding gene, is transiently expressed in nondifferentiated mesodermal cells during organogenesis. We examined the hypothesis that this expression is associated with mesenchymal cell proliferation. For this purpose, we established a cell culture derived from fetal skin mesenchyme that specifically expresses proenkephalin mRNA in correlation with hypodermis development. These mesenchymal cells also produce and secrete significant amounts of proenkephalin-derived peptides. Using this model system, we observed a marked increase in proenkephalin mRNA expression in response to serum. This effect is time dependent and reaches peak levels during the G1/S transition. Similarly, 12-O-tetradecanoyl-phorbol-13-ester, whose biological actions have been shown to be mediated by the activity of protein kinase C (PKC), up-regulates proenkephalin expression. Desensitization of PKC by prolonged exposure of cells to 12-O-tetradecanoyl-phorbol-13-ester attenuates the serum induction of proenkephalin. The results presented in this report demonstrate that proenkephalin expression in mesenchymal cells is regulated by serum factors via mechanisms that involve PKC activity. A possible association between proenkephalin expression and cell proliferation is suggested.