Transgenic mice overexpressing Sfrp4 in osteoblasts were established. These mice exhibited low bone mass caused by a decrease in bone formation. We recently reported that single nucleotide polymorphisms in the secreted frizzled-related protein 4 (Sfrp4) gene are responsible for low peak BMD in senescence-accelerated mouse (SAM) P6. In vitro studies revealed inhibition of osteoblast proliferation by Sfrp4, which is supposed to be mediated by canonical Wnt signaling. We examined the expression of Sfrp4 in neonate long bones by in situ hybridization and generated transgenic mice in which Sfrp4 was specifically overexpressed in osteoblasts under the control of a 2.3-kb Col1a1 osteoblast-specific promoter. Next, we compared the phenotype of Sfrp4 transgenic (Sfrp4 TG) mice with that of mice in which one allele of beta-catenin was conditionally disrupted in osteoblasts (betaChet), and administered lithium chloride (LiCl) to Sfrp4 TG mice. Hemizygous Sfrp4 TG mice exhibited a 30% reduction of trabecular bone mass compared with that in wildtype littermates at 8 wk of age, and histomorphometrical analysis showed decreases in both osteoblast numbers and bone formation rate. betaChet mice exhibited a 17% reduction of trabecular bone mass in distal femora caused by an increase in the osteoclast number and a decrease in bone formation rate. Furthermore, LiCl administration rescued the bone phenotype of Sfrp4 TG mice. Expression of Sfrp4 in periosteum and bone tissues suggested the role of Sfrp4 in osteoblasts, and we identified that overexpression of Sfrp4 in osteoblasts suppressed osteoblast proliferation, resulting in a decrease in bone formation in vivo. Partial suppression of beta-catenin/canonical Wnt signaling also impaired bone formation, and activation of the signaling restored low bone mass of Sfrp4 TG mice. Thus, these results indicate that Sfrp4 decreases bone formation at least in part by attenuating canonical Wnt signaling in vivo.