Bone loss is common in advanced cirrhosis, although the precise mechanisms underlying bone loss in cirrhosis are unknown. We studied the profile and functionality of bone‐forming cells and bone‐building proteins in bone marrow (BM) of individuals with cirrhosis (n = 61) and individuals without cirrhosis as normal controls (n = 50). We also performed dual energy X‐ray absorptiometry for clinical correlation. BM mesenchymal cells (MSCs) were analyzed for colony‐forming units‐fibroblasts and their osteogenic (fibronectin‐1 [FN1], insulin‐like growth factor binding protein 3 [IGFBP3], collagen type 1 alpha 1 chain [COL1A1], runt‐related transcription factor 2 [RUNX2], and alkaline phosphatase, liver [ALPL]) and adipogenic ( adiponectin, C1Q, and collagen domain containing [ADIPOQ], peroxisome proliferator‐activated receptor gamma [PPARγ], and fatty acid binding protein 4 [FABP4]) potentials. Colony‐forming units‐fibroblasts were lower in patients with cirrhosis (P = 0.002) than in controls. Cirrhotic BM‐MSCs showed >2‐fold decrease in osteogenic markers. Compared to controls, patients with cirrhosis showed fewer osteocytes (P = 0.05), osteoblasts, chondroblasts, osteocalcin‐positive (osteocalcin+) area, clusters of differentiation (CD)169+ macrophages (P < 0.001, each), and nestin+ MSCs (P = 0.001); this was more apparent in Child‐Turcotte‐Pugh (CTP) class C than A (P < 0.001). Multivariate logistic regression showed low nestin+ MSCs (P = 0.004) as a predictor of bone loss. Bone‐resolving osteoclasts were comparable among CTP groups, but >2‐fold decreased anti‐osteoclastic and increased pro‐osteoclastic factors were noted in patients with CTP C compared to CTP A. Bone‐building proteins (osteocalcin [P = 0.008], osteonectin [P < 0.001], and bone morphogenic protein 2 [P = 0.001]) were decreased while anti‐bone repair factors (fibroblast growth factor 23 [P = 0.015] and dipeptidyl peptidase 4 [P < 0.001]) were increased in BM and peripheral blood; this was more apparent in advanced cirrhosis. The dual energy X‐ray absorptiometry scan T score significantly correlated with the population of osteoblasts, osteocytes, MSCs, and CD169+ macrophages. Conclusion: Osteoprogenitor cells are substantially reduced in patients with cirrhosis and more so in advanced disease. Additionally, increased anti‐bone repair proteins enhance the ineffective bone repair and development of osteoporosis in cirrhosis. Hepatology Communications 2018;0:0‐0)