The mechanistic target of rapamycin (mTOR) integrates both intracellular and extracellular signals to regulate cell growth and metabolism. However, the role of mTOR signaling in osteoblast differentiation and bone formation is undefined, and the underlying mechanisms have not been elucidated. Here, we report that activation of mTOR complex 1 (mTORC1) is required for preosteoblast proliferation; however, inactivation of mTORC1 is essential for their differentiation and maturation. Inhibition of mTORC1 prevented preosteoblast proliferation, but enhanced their differentiation in vitro and in mice. Activation of mTORC1 by deletion of tuberous sclerosis 1 (Tsc1) in preosteoblasts produced immature woven bone in mice due to excess proliferation but impaired differentiation and maturation of the cells. The mTORC1-specific inhibitor, rapamycin, restored these in vitro and in vivo phenotypic changes. Mechanistically, mTORC1 prevented osteoblast maturation through activation of the STAT3/p63/Jagged/Notch pathway and downregulation of Runx2. Preosteoblasts with hyperactive mTORC1 reacquired the capacity to fully differentiate and maturate when subjected to inhibition of the Notch pathway. Together, these findings identified the role of mTORC1 in osteoblast formation and established that mTORC1 prevents preosteoblast differentiation and maturation through activation of the Notch pathway.