Members of the AP-1 family of transcription factors participate in the regulation of bone cell proliferation and differentiation. We report here a potent AP-1-related regulator of osteoblast function: DeltaFosB, a naturally occurring truncated form of FosB that arises from alternative splicing of the fosB transcript and is expressed in osteoblasts. Overexpression of DeltaFosB in transgenic mice leads to increased bone formation throughout the skeleton and a continuous post-developmental increase in bone mass, leading to osteosclerosis. In contrast, DeltaFosB inhibits adipogenesis both in vivo and in vitro, and downregulates the expression of early markers of adipocyte differentiation. Because osteoblasts and adipocytes are thought to share a common precursor, it is concluded that DeltaFosB transcriptionally regulates osteoblastogenesis, possibly at the expense of adipogenesis.