The heterotrimeric G protein subunit Gsα stimulates cAMP-dependent signaling downstream of G protein-coupled receptors. In this study, we set out to determine the role of Gsα signaling in cells of the early osteoblast lineage in vivo by conditionally deleting Gsα from osterix-expressing cells. This led to severe osteoporosis with fractures at birth, a phenotype that was found to be the consequence of impaired bone formation rather than increased resorption. Osteoblast number was markedly decreased and osteogenic differentiation was accelerated, resulting in the formation of woven bone. Rapid differentiation of mature osteoblasts into matrix-embedded osteocytes likely contributed to depletion of the osteoblast pool. In addition, the number of committed osteoblast progenitors was diminished in both bone marrow stromal cells (BMSCs) and calvarial cells of mutant mice. In the absence of Gsα, expression of sclerostin and dickkopf1 (Dkk1), inhibitors of canonical Wnt signaling, was markedly increased; this was accompanied by reduced Wnt signaling in the osteoblast lineage. In summary, we have shown that Gsα regulates bone formation by at least two distinct mechanisms: facilitating the commitment of mesenchymal progenitors to the osteoblast lineage in association with enhanced Wnt signaling; and restraining the differentiation of committed osteoblasts to enable production of bone of optimal mass, quality, and strength.