The recent identification of the genes responsible for several human genetic diseases affecting bone homeostasis and the characterization of mouse models for these diseases indicated that canonical Wnt signaling plays a critical role in the control of bone mass. Here, we report that the osteoblast-specific transcription factor Osterix (Osx), which is required for osteoblast differentiation, inhibits Wnt pathway activity. First, in calvarial cells of embryonic day (E)18.5 Osx-null embryos, expression of the Wnt antagonist Dkk1 was abolished, and that of Wnt target genes c-Myc and cyclin D1 was increased. Moreover, our studies demonstrated that Osx bound to and activated the Dkk1 promoter. In addition, Osx inhibited beta-catenin-induced Topflash reporter activity and beta-catenin-induced secondary axis formation in Xenopus embryos. Importantly, in calvaria of E18.5 Osx-null embryos harboring the TOPGAL reporter transgene, beta-galactosidase activity was increased, suggesting that Osx inhibited the Wnt pathway in osteoblasts in vivo. Our data further showed that Osx disrupted binding of Tcf to DNA, providing a likely mechanism for the inhibition by Osx of beta-catenin transcriptional activity. We also showed that Osx decreased osteoblast proliferation. Indeed, E18.5 Osx-null calvaria showed greater BrdU incorporation than wild-type calvaria and that Osx overexpression in C2C12 mesenchymal cells inhibited cell growth. Because Wnt signaling has a major role in stimulating osteoblast proliferation, we speculate that Osx-mediated inhibition of osteoblast proliferation is a consequence of the Osx-mediated control of Wnt/beta-catenin activity. Our results add a layer of control to Wnt/beta-catenin signaling in bone.