Er-xian Decoction (EXD), containing Herba epimedii Maxim (HEP) and Curculigo orchioides Gaertn (XM) as principal drugs, is a traditional Chinese medicine (TCM) formula prescribed for the treatment of postmenopausal osteoporosis. In the present study, the in vivo anti-osteoporosis effects of EXD, HEP and XM on four-month-old ovariectomized (OVX) Sprague-Dawley rats were investigated. Micro-computed tomography analysis showed that EXD could significantly improve the micro-architectural parameters (BMD, BV/TV, Tb.N, Tb.Th, and Tb.Sp) of trabecular bone in the distal femur and proximal tibia in OVX rats (p < 0.05). The biomechanical parameters of the distal femur in rats treated with EXD were also improved significantly (p < 0.05 vs. OVX group). The in vivo efficacy of EXD was found to be superior to HEP or XM alone in improving the bone properties of OVX rats. Treatment of rat osteoblastic-like UMR-106 cells with EXD, HEP, and XM significantly promoted the cell proliferation rate (p < 0.05) with the most promising effects observed in cells treated with EXD (p < 0.001). The proliferative effect in UMR-106 cells induced by EXD, HEP, and XM were abolished in the presence of the estrogen antagonist, ICI182780, suggesting that their effects were mediated by estrogen receptor (ER). Additionally, EXD could activate ER-α and ER-β mediated estrogen-response element (ERE)-dependent luciferase activity as well as phosphorylate ER-α at serine 118 in UMR-106 cells. Taken together, EXD offered better osteoprotective effects than its single principal herb, and the beneficial effects of EXD in preventing bone deteriorations are, at least partially, through the ER signaling pathway.