Effective osteoporosis therapy requires agents that increase the amount and/or quality of bone. Any modification of osteoclast-mediated bone resorption by disease or drug treatment, however, elicits a parallel change in osteoblast-mediated bone formation because the processes are tightly coupled. Anabolic approaches now focus on uncoupling osteoblast action from osteoclast formation, for example, by inhibiting sclerostin, an inhibitor of bone formation that does not influence osteoclast differentiation. Here, we report that oncostatin M (OSM) is produced by osteoblasts and osteocytes in mouse bone and that it has distinct effects when acting through 2 different receptors, OSM receptor (OSMR) and leukemia inhibitory factor receptor (LIFR). Specifically, mouse OSM (mOSM) inhibited sclerostin production in a stromal cell line and in primary murine osteoblast cultures by acting through LIFR. In contrast, when acting through OSMR, mOSM stimulated RANKL production and osteoclast formation. A key role for OSMR in bone turnover was confirmed by the osteopetrotic phenotype of mice lacking OSMR. Furthermore, in contrast to the accepted model, in which mOSM acts only through OSMR, mOSM inhibited sclerostin expression in Osmr(-/-) osteoblasts and enhanced bone formation in vivo. These data reveal what we believe to be a novel pathway by which bone formation can be stimulated independently of bone resorption and provide new insights into OSMR and LIFR signaling that are relevant to other medical conditions, including cardiovascular and neurodegenerative diseases and cancer.