The hypoxia-inducible factor-1α (HIF-1α)/vascular endothelial growth factor (VEGF) pathway is involved in skeletal development, bone repair, and postmenopausal osteoporosis. Inhibitors of prolyl hydroxylases (PHD) enhance vascularity, increase callus formation in a stabilized fracture model, and activate the HIF-1α/VEGF pathway. This study examined the effects of estrogen on the HIF-1α/VEGF pathway in osteoblasts and whether PHD inhibitors can protect from bone loss in postmenopausal osteoporosis. Osteoblasts were treated with estrogen, and expressions of HIF-1α and VEGF were measured at mRNA (qPCR) and protein (Western blot) levels. Further, osteoblasts were treated with inhibitors of the phosphatidylinositol 3-kinase (PI3K)/protein kinase B (Akt) pathway, and levels of VEGF mRNA and protein expression were detected. In addition, ovariectomized rats were treated with PHD inhibitors, and bone microarchitecture and bone mechanical strength were assessed using micro-CT and biomechanical analyses (lower ultimate stress, modulus, and stiffness). Blood vessel formation was measured with India Ink Perfusion and immunohistochemistry. Estrogen, in a dose- and time-dependent manner, induced VEGF expression at both mRNA and protein levels and enhanced HIF-1α protein stability. Further, the estrogen-induced VEGF expression in osteoblasts involved the PI3K/Akt pathway. PHD inhibitors increased bone mineral density, bone microarchitecture and bone mechanical strength, and promoted blood vessel formation in ovariectomized rats. In conclusion, estrogen and PHD inhibitors activate the HIF-1α/VEGF pathway in osteoblasts. PHD inhibitors can be utilized to protect bone loss in postmenopausal osteoporosis by improving bone vascularity and angiogenesis in bone marrow.