Collagen hydrolysate (CH) has been reported to exhibit a positive effect on bone. In the present study, the in vitro effects of CH (<3 kDa) were examined and the in vivo experiments confirmed the positive effects of CH in ovariectomized (OVX) rats. Bone mineral density (BMD) was examined by DXA analysis. Scanning electron microscopic analysis and quantitative 3D-color backscattered electrons imaging analysis were performed on the lumbar vertebrae. CH increased osteoblastic cell proliferation and alkaline phosphatase activity in a dose-dependent manner. Collagen synthesis and collagen, type1, alpha1 (COL1A1) gene expression were also increased by CH treatment. Furthermore, CH-induced COL1A1 gene expression was completely abolished by extracellular signal-regulated kinase (ERK) inhibitor, suggesting the involvement of ERK/MAPK signaling for transcriptional effects on COL1A1 expression. OVX rats supplemented with CH showed osteoprotective effects as the BMD levels were increased compared with control. Moreover, CH prevented the trabecular bone loss induced by OVX and improved the microarchitecture of lumbar vertebrae. CH administration dose-dependently reduced the serum procollagen type I N-terminal propeptide level, which was elevated by OVX. The present study suggests that CH isolated in this study is a promising alternative to current therapeutic agents for the management of osteoporosis.