Osteoporosis constitutes a major worldwide public health burden characterized by enhanced skeletal fragility. Bone metabolism is the combination of bone resorption by osteoclasts and bone formation by osteoblasts. Whereas increase in bone resorption is considered as the main contributor of bone loss that may lead to osteoporosis, this loss is accompanied by increased bone marrow adiposity. Osteoblasts and adipocytes share the same precursor cell and an inverse relationship exists between the two lineages. Therefore, identifying signaling pathways that stimulate mesenchymal stem cells osteogenesis at the expense of adipogenesis is of major importance for developing new therapeutic treatments. For this purpose, we identified by transcriptomic analysis the oxytocin receptor pathway as a potential regulator of the osteoblast/adipocyte balance of human multipotent adipose-derived stem (hMADS) cells. Both oxytocin (OT) and carbetocin (a stable OT analogue) negatively modulate adipogenesis while promoting osteogenesis in both hMADS cells and human bone marrow mesenchymal stromal cells. Consistent with these observations, ovariectomized (OVX) mice and rats, which become osteoporotic and exhibit disequilibrium of this balance, have significant decreased OT levels compared to sham-operated controls. Subcutaneous OT injection reverses bone loss in OVX mice and reduces marrow adiposity. Clinically, plasma OT levels are significantly lower in postmenopausal women developing osteoporosis than in their healthy counterparts. Taken together, these results suggest that plasma OT levels represent a novel diagnostic marker for osteoporosis and that OT administration holds promise as a potential therapy for this disease.