Estrogen plays a fundamental role in skeletal growth and bone homeostasis in both men and women. Although remarkable progress has been made in our understanding of how estrogen deficiency causes bone loss, the mechanisms involved have proven to be complex and multifaceted. Although estrogen is established to have direct effects on bone cells, recent animal studies have identified additional unexpected regulatory effects of estrogen centered at the level of the adaptive immune response. Furthermore, a potential role for reactive oxygen species has now been identified in both humans and animals. One major challenge is the integration of a multitude of redundant pathways and cytokines, each apparently capable of playing a relevant role, into a comprehensive model of postmenopausal osteoporosis. This Review presents our current understanding of the process of estrogen deficiency-mediated bone destruction and explores some recent findings and hypotheses to explain estrogen action in bone. Due to the inherent difficulties associated with human investigation, many of the lessons learned have been in animal models. Consequently, many of these principles await further validation in humans.