We explored the role of G␣ q -mediated signaling on skeletal homeostasis by selectively expressing a constitutively active G␣ q (mutation of Q209L) in osteoblasts. Continuous signaling via G␣ q in mouse osteoblastic MC3T3-E1 cells impaired differentiation. Mice that expressed the constitutively active G␣ q transgene in cells of the osteoblast lineage exhibited severe osteopenia in cortical and trabecular bones. Osteoblast number, bone volume, and trabecular thickness were reduced in transgenic mice, but the osteoclasts were unaffected. Osteoblasts from transgenic mice showed impaired differentiation and matrix formation. In the presence of a protein kinase C inhibitor GF109203X, this impairment was not seen, indicating mediation by the protein kinase C pathway. We propose that continuous activation of the G␣ q signal in osteoblasts plays a crucial, previously unrecognized role in bone formation.