Carboxypeptidase E (CPE) is a prohormone/proneuropeptide processing enzyme, and mice bearing CPE mutations exhibit an obese and diabetic phenotype. Studies on CPE knockout (KO) mice revealed poor prohormone processing, resulting in deficiencies in peptide hormones/neuropeptides such as insulin, gonadotropin-releasing hormone, and cocaine- and amphetamine-regulated transcript (CART). Here, we show that CPE KO mice, an obese animal model, have low bone mineral density (BMD) accompanied by elevated plasma CTX-1 (carboxy-terminal collagen crosslinks), and osteocalcin, indicators of increased bone turnover. Receptor activator for NF-kappaB ligand (RANKL) expression was elevated approximately 2-fold relative to osteoprotegerin in the femur of KO animals, suggesting increased osteoclastic activity in the KO mice. In the hypothalamus, mature CART, a peptide involved in eating behavior and implicated in bone metabolism, was undetectable. The melanocortin and neuropeptide Y (NPY) systems in the hypothalamus have also been implicated in bone remodeling, since MC4R KO and NPY KO mice have increased BMD. However, reduction of alpha-MSH, the primary ligand of MC4R by up to 94% and the lack of detectable NPY in the hypothalamus of CPE KO do not recapitulate the single-gene KO phenotypes. This study highlights the complex physiological interplay between peptides involved in energy metabolism and bone formation and furthermore suggests the possibility that patients, bearing CPE and CART mutations leading to inactive forms of these molecules, may be at a higher risk of developing osteoporosis.