ICER is a member of the CREM family of basic leucine zipper transcription factors that acts as a dominant negative regulator of gene transcription. Four different isoforms of ICER (I, Igamma, II and IIgamma) are transcribed from the P2 promoter of the Crem gene. We previously found that each of the ICER isoforms is induced by parathyroid hormone in osteoblasts. The goal of the present study was to assess the function of ICER in bone by overexpressing ICER in osteoblasts of transgenic mice. ICER I and ICER II cDNAs, each containing an N-terminal FLAG epitope tag, were cloned downstream of a fragment containing 3.6 kb of the rat Col1a1 promoter and most of the rat Col1a1 first intron to produce pOBCol3.6-ICER I and pOBCol3.6-ICER II transgenes, respectively. Multiple lines of mice were generated bearing the ICER I and ICER II transgenes. At 8 weeks of age, ICER I and ICER II transgenic mice had lower body weights and decreased bone mineral density of femurs and vertebrae. Further studies were done with ICER I transgenic mice, which had greatly reduced trabecular bone volume and a markedly decreased bone formation rate in femurs. Osteoblast differentiation and osteocalcin expression were reduced in ex vivo bone marrow cultures from ICER I transgenic mice. ICER I antagonized the activity of ATF4 at its consensus DNA binding site in the osteocalcin promoter in vitro. Thus, transgenic mice with osteoblast-targeted overexpression of ICER exhibited osteopenia caused primarily by reduced bone formation. We speculate that ICER regulates the activity and/or expression of ATF/CREB factors required for normal bone formation.