Msx2 is a homeodomain transcription factor first identified in craniofacial bone and human femoral osteoblasts. We hypothesized that Msx2 might activate skeletal Wnt signaling. Therefore, we analyzed the effects of CMV-Msx2 transgene (Msx2Tg) expression on skeletal physiology and composition. Skeletal Msx2 expression was increased 2-3-fold by Msx2Tg, with expanded protein accumulation in marrow, secondary ossification centers, and periosteum. Microcomputed tomography established increased bone volume in Msx2Tg mice, with increased numbers of plate-like trabeculae. Histomorphometry revealed increased bone formation in Msx2Tg mice versus non-Tg siblings, arising from increased osteoblast numbers. While decreasing adipogenesis, Msx2Tg increased osteogenic differentiation via mechanisms inhibited by Dkk1, an antagonist of Wnt receptors LRP5 and LRP6. Bone from Msx2Tg mice elaborated higher levels of Wnt7 canonical agonists, with diminished Dkk1, changes that augment canonical signaling. Analysis of non-Tg and Msx2Tg siblings possessing the TOPGAL reporter confirmed this; Msx2Tg up-regulated skeletal beta-galactosidase expression (p </= 0.01), along with Wnt7a and Wnt7b, and reduced circulating Dkk1. To better understand molecular mechanisms, we studied C3H10T1/2 osteoprogenitor cells. As in bone, Msx2 increased Wnt7 genes and down-regulated Dkk1, while inducing the osteoblast gene alkaline phosphatase. Msx2-directed RNA interference increased Dkk1 expression and promoter activity, while reducing Wnt7a, Wnt7b, and alkaline phosphatase. Moreover, Msx2 inhibited Dkk1 promoter activity and reduced RNA polymerase association with Dkk1 chromatin. RNA interference-mediated knockdown of Wnt7a, Wnt7b, and LRP6 significantly reduced Msx2-induced alkaline phosphatase. Msx2 exerts bone anabolism in part by reducing Dkk1 expression and enhancing Wnt signaling, thus promoting osteogenic differentiation of skeletal progenitors.