Guanylate Binding Proteins (GBPs) are a group of cytokine-inducible large guanosine triphosphatase. Previous studies have shown high expression of GBP1 in circulating monocytes of premenopausal subjects was correlated to extremely low peak bone mass, which is considered as an important determinant of osteoporosis. However, whether GBPs play a role in regulation of osteogenesis of mesenchymal stromal cells (MSCs) remains largely unknown. In the present study, we found that mRNA expression of GBP1 was highest among all the GBPs, and it was dramatically downregulated during osteogenic differentiation of human MSCs derived from bone marrow (hBM-MSCs). While siRNA-mediated knockdown of GBP1 promoted osteogenesis, overexpression of GBP1 suppressed osteogenesis of hBM-MSCs. Furthermore, we found GBP1 is required for expression of indoleamine 2,3 dioxygenase (IDO), Interleukin 6 (IL-6) and IL-8 induced by treatment with Interferon-γ (IFN-γ). Depletion of GBP1 rescued the inhibited osteogenesis induced by IFN-γ treatment, at least in part. Collectively, our findings indicate GBP1 inhibits osteogenic differentiation of MSCs, and inhibition of GBP1 expression may prevent development of osteoporosis and facilitate MSC-based bone regeneration.