Osteoporosis is caused by increased bone resorption and decreased bone formation. Intermittent administration of a fragment of Parathyroid hormone (PTH) activates osteoblast-mediated bone formation and is used in patients with severe osteoporosis. However, the mechanisms by which PTH elicits its anabolic effect are not fully elucidated. Here we show that the absence of the homeodomain protein TG-interacting factor 1 (Tgif1) impairs osteoblast differentiation and activity, leading to a reduced bone formation. Deletion of Tgif1 in osteoblasts and osteocytes decreases bone resorption due to an increased secretion of Semaphorin 3E (Sema3E), an osteoclast-inhibiting factor. Tgif1 is a PTH target gene and PTH treatment failed to increase bone formation and bone mass in Tgif1-deficient mice. Thus, our study identifies Tgif1 as a novel regulator of bone remodeling and an essential component of the PTH anabolic action. These insights contribute to a better understanding of bone metabolism and the anabolic function of PTH.