Mineralization, a characteristic phenotypic property of osteoblastic lineage cells, was blocked by 4-(2-aminoethyl) benzenesulfonyl fluoride hydrochloride (AEBSF) and decanoyl-Arg-Arg-Leu-Leu-chloromethyl ketone (dec-RRLL-cmk), inhibitors of SKI-1 (site 1; subtilisin kexin like-1) protease. Because SKI-1 is required for activation of SREBP and CREB (cAMP-response element-binding protein)/ATF family transcription factors, we tested the effect of these inhibitors on gene expression. AEBSF decreased expression of 140 genes by 1.5-3.0-fold including Phex, Dmp1, COL1A1, COL11A1, and fibronectin. Direct comparison of AEBSF and dec-RRLL-cmk, a more specific SKI-1 inhibitor, demonstrated that expression of Phex, Dmp1, COL11A1, and fibronectin was reduced by both, whereas COL1A2 and HMGCS1 were reduced only by AEBSF. AEBSF and dec-RRLL-cmk decreased the nuclear content of SKI-1-activated forms of transcription factors SREBP-1, SREBP-2, and OASIS. In contrast to AEBSF, the actions of dec-RRLL-cmk represent the sum of its direct actions on SKI-1 and indirect actions on caspase-3. Specifically, dec-RRLL-cmk reduced intracellular caspase-3 activity by blocking the formation of activated 19-kDa caspase-3. Conversely, overexpression of SKI-1-activated SREBP-1a and CREB-H in UMR106-01 osteoblastic cells increased the number of mineralized foci and altered their morphology to yield mineralization nodules, respectively. In summary, SKI-1 regulates the activation of transmembrane transcription factor precursors required for expression of key genes required for mineralization of osteoblastic cultures in vitro and bone formation in vivo. Our results indicate that the differentiated phenotype of osteoblastic cells and possibly osteocytes depends upon the non-apoptotic actions of SKI-1.