The ontogeny of bone marrow and its stromal compartment, which is generated from skeletal stem/progenitor cells, was investigated in vivo and ex vivo in mice expressing constitutively active parathyroid hormone/parathyroid hormone-related peptide receptor (PTH/PTHrP; caPPR) under the control of the 2.3-kb bone-specific mouse Col1A1 promoter/enhancer. The transgene promoted increased bone formation within prospective marrow space, but delayed the transition from bone to bone marrow during growth, the formation of marrow cavities, and the appearance of stromal cell types such as marrow adipocytes and cells supporting hematopoiesis. This phenotype resolved spontaneously over time, leading to the establishment of marrow containing a greatly reduced number of clonogenic stromal cells. Proliferative osteoprogenitors, but not multipotent skeletal stem cells (mesenchymal stem cells), capable of generating a complete heterotopic bone organ upon in vivo transplantation were assayable in the bone marrow of caPPR mice. Thus, PTH/PTHrP signaling is a major regulator of the ontogeny of the bone marrow and its stromal tissue, and of the skeletal stem cell compartment.