Dasatinib, a dual Src family kinase and Abl inhibitor, is being tested clinically for the treatment of prostate cancer bone metastasis. Bidirectional interactions between osteoblasts and prostate cancer cells are critical in the progression of prostate cancer in bone, but the effect of dasatinib on osteoblasts is unknown. We found that dasatinib inhibited proliferation of primary mouse osteoblasts isolated from mouse calvaria and the immortalized MC3T3-E1 cell line. In calvarial osteoblasts from Col-luc transgenic mice carrying osteoblast-specific Col1alpha1 promoter reporter, luciferase activity was inhibited. Dasatinib also inhibited fibroblast growth factor-2-induced osteoblast proliferation, but strongly promoted osteoblast differentiation, as reflected by stimulation of alkaline phosphatase activity, osteocalcin secretion and osteoblast mineralization. To determine how dasatinib blocks proliferative signaling in osteoblasts, we analyzed the expression of a panel of tyrosine kinases, including Src, Lyn, Fyn, Yes and Abl, in osteoblasts. In the Src family kinases, only Src was activated at a high level. Abl was expressed at a low level in osteoblasts. Phosphorylation of Src-Y419 or Abl-Y245 was inhibited by dasatinib treatment. Knockdown of either Src or Abl by lenti-shRNA in osteoblasts enhances osteoblast differentiation, suggesting that dasatinib enhances osteoblast differentiation through inhibition of both Src and Abl.