During the past few years, considerable evidence has uncovered a strong relationship between fat and bone metabolism. Consequently, alterations in plasma lipid metabolic pathways strongly affect bone mass and quality. We recently showed that the deficiency of apolipoprotein A-1 (APOA1), a central regulator of high-density lipoprotein cholesterol (HDL-C) metabolism, results in reduced bone mass in C57BL/6 mice. It is documented that apolipoprotein E (APOE), a lipoprotein know for its atheroprotective functions and de novo biogenesis of HDL-C, is associated with the accumulation of fat in the liver and other organs and regulates bone mass in mice. We further studied the mechanism of APOE in bone metabolism using well-characterized APOE knockout mice. We found that bone mass was remarkably reduced in APOE deficient mice fed Western-type diet (WTD) compared to wild type counterparts. Static (microCT-based) and dynamic histomorphometry showed that the reduced bone mass in APOΕ-/- mice is attributed to both decreased osteoblastic bone synthesis and elevated osteoclastic bone resorption. Interestingly, histologic analysis of femoral sections revealed a significant reduction in the number of bone marrow lipoblasts in APOΕ-/- compared to wild type mice under WTD. Analyses of whole bone marrow cells obtained from femora of both animal groups showed that APOE null mice had significantly reduced levels of the osteoblastic (RUNX2 and Osterix) and lipoblastic (PPARγ and CEBPα) cardinal regulators. Additionally, the modulators of bone remodeling RANK, RANKL, and cathepsin K were greatly increased, while OPG and the OPG/RANKL ratio were remarkably decreased in APOΕ-/- mice fed WTD, compared to their wild-type counterparts. These findings suggest that APOE deficiency challenged with WTD reduces osteoblastic and lipoblastic differentiation and activity, whereas it enhances osteoclastic function, ultimately resulting in reduced bone mass, in mice.