Calcium signaling plays a central role in the regulation of bone cells, although uncertainty remains with regard to the channels involved. In previous studies, we determined that the calcium channel Orai1 was required for the formation of multinucleated osteoclasts in vitro. To define the skeletal functions of calcium release-activated calcium currents, we compared the mice with targeted deletion of the calcium channel Orai1 to wild-type littermate controls, and examined differentiation and function of osteoblast and osteoclast precursors in vitro with and without Orai1 inhibition. Consistent with in vitro findings, Orai1(-/-) mice lacked multinucleated osteoclasts. Yet, they did not develop osteopetrosis. Mononuclear cells expressing osteoclast products were found in Orai1(-/-) mice, and in vitro studies showed significantly reduced, but not absent, mineral resorption by the mononuclear osteoclast-like cells that form in culture from peripheral blood monocytic cells when Orai1 is inhibited. More prominent in Orai1(-/-) mice was a decrease in bone with retention of fetal cartilage. Micro-computed tomography showed reduced cortical ossification and thinned trabeculae in Orai1(-/-) animals compared with controls; bone deposition was markedly decreased in the knockout mice. This suggested a previously unrecognized role for Orai1 within osteoblasts. Analysis of osteoblasts and precursors in Orai1(-/-) and control mice showed a significant decrease in alkaline phosphatase-expressing osteoblasts. In vitro studies confirmed that inhibiting Orai1 activity impaired differentiation and function of human osteoblasts, supporting a critical function for Orai1 in osteoblasts, in addition to its role as a regulator of osteoclast formation.