Skeletal cells synthesize IGFs and their six IGF binding proteins (IGFBP). IGFBP-5 was reported to stimulate bone cell growth in vitro and selected parameters of osteoblastic function in vivo, but its actual effects on bone formation are not established. We investigated the direct effects of IGFBP-5 on bone remodeling in two lines of transgenic mice overexpressing IGFBP-5 under the control of the osteocalcin promoter. Static and dynamic histomorphometry revealed that IGFBP-5 transgenic mice had a transient decrease in trabecular bone volume secondary to reduced trabecular number and thickness and a transient decrease in bone mineral apposition rate. Osteoblast number was normal, indicating impaired osteoblastic function. Osteoclast number and bone resorption were normal. Total, vertebral, and femoral bone mineral densities were reduced in IGFBP-5 transgenics by 14-27% at 4 wk of age, but not in older animals. Stromal cells expressing the IGFBP-5 transgene displayed decreased expression of alkaline phosphatase, osteocalcin, core binding factor 1, and type I collagen transcripts when compared with cells from wild-type animals. In conclusion, transgenic mice overexpressing IGFBP-5 in the bone microenvironment have a transient decrease in trabecular bone volume, impaired osteoblastic function, and osteopenia.