Parathyroid hormone (PTH) regulates bone remodeling by activating PTH type 1 receptor (PTH1R) in osteoblasts/osteocytes. Insulin-like growth factor type 1 (IGF-1) stimulates mesenchymal stem cell differentiation to osteoblasts. However, little is known about the signaling mechanisms that regulates the osteoblast-to-osteocyte transition. Here we report that PTH and IGF-I synergistically enhance osteoblast-to-osteocyte differentiation. We identified that a specific tyrosine residue, Y494, on the cytoplasmic domain of PTH1R can be phosphorylated by insulin-like growth factor type I receptor (IGF1R) in vitro. Phosphorylated PTH1R localized to the barbed ends of actin filaments and increased actin polymerization during morphological change of osteoblasts into osteocytes. Disruption of the phosphorylation site reduced actin polymerization and dendrite length. Mouse models with conditional ablation of PTH1R in osteoblasts demonstrated a reduction in the number of osteoctyes and dendrites per osteocyte, with complete overlap of PTH1R with phosphorylated-PTH1R positioning in osteocyte dendrites in wild-type mice. Thus, our findings reveal a novel signaling mechanism that enhances osteoblast-to-osteocyte transition by direct phosphorylation of PTH1R by IGF1R.