Dexamethasone (Dex), a synthetic glucocorticoid, has a clinical adverse effect on bone acquisition and metabolism at pharmacological doses. To investigate the underlying mechanisms of Dex induced bone loss, we employed calvaria derived mesenchymal progenitor cells (MPCs) to examine the effects of Dex on their osteoblast lineage commitment and mineralization function. MPCs were cultured up to 28 days in the presence or absence of pharmacological doses of Dex. Alkaline phosphatase (ALP) and von Kossa histochemical staining showed that Dex decreased ALP activity and mineralized nodule formation. In addition, Dex treatment led to inhibition of cell proliferation and a decrease of cell numbers as assessed by BrdU incorporation and MTT methods, while it increased apoptosis as shown by flow cytometry of annexin V-stained cells. These effects were associated with a marked reduction of secreted IGF-I levels as indicated by ELISA quantification, raising the possibility that Dex decreased proliferation and promoted apoptosis of MPCs through the inhibition of IGF-I secretion. To further define the effect of Dex on osteoblast lineage commitment, Runx2 and Osx, the key transcription regulators of osteogenesis, were determined at both mRNA and protein levels. Interestingly, no effects were observed on mRNA and protein expression of Osx, while the mRNA and protein levels of Runx2 were inhibited by Dex treatment. Taken together, the inhibition of the expression of IGF-I and Runx2 by Dex in this in vitro system may account for the impaired MCP proliferation, osteoblastic differentiation and mineralized matrix deposition. These findings and the in vitro MCP system developed will facilitate further mechanistic studies of glucocorticoid induced bone loss.