Osteoporosis is defined as reduced bone mineral density with a high risk of fragile fracture. Current available treatment regimens include antiresorptive drugs such as estrogen receptor analogues and bisphosphates and anabolic agents such as parathyroid hormone (PTH). However, neither option is completely satisfactory because of adverse effects. It is thus highly desirable to identify novel anabolic agents to improve future osteoporosis treatment. Osthole, a coumarin-like derivative extracted from Chinese herbs, has been shown to stimulate osteoblast proliferation and differentiation, but its effect on bone formation in vivo and underlying mechanism remain unknown. In this study, we found that local injection of Osthole significantly increased new bone formation on the surface of mouse calvaria. Ovariectomy caused evident bone loss in rats, whereas Osthole largely prevented such loss, as shown by improved bone microarchitecture, histomorphometric parameters, and biomechanical properties. In vitro studies demonstrated that Osthole activated Wnt/b-catenin signaling, increased Bmp2 expression, and stimulated osteoblast differentiation. Targeted deletion of the β-catenin and Bmp2 genes abolished the stimulatory effect of Osthole on osteoblast differentiation. Since deletion of the Bmp2 gene did not affect Osthole-induced β-catenin expression and the deletion of the β-catenin gene inhibited Osthole-regulated Bmp2 expression in osteoblasts, we propose that Osthole acts through b-catenin-BMP signaling to promote osteoblast differentiation. Our findings demonstrate that Osthole could be a potential anabolic agent to stimulate bone formation and prevent estrogen deficiency-induced bone loss. © 2010 American Society for Bone and Mineral Research.