Tumor necrosis factor-alpha (TNFα) plays a pivotal role in inflammation-related osteoporosis through the promotion of bone resorption and suppression of bone formation. Numerous drugs have been produced to treat osteoporosis by inhibiting bone resorption, but they offer few benefits to bone formation, which is what is needed by patients with severe bone loss. Melatonin, which can exert both anti-inflammatory and pro-osteogenic effects, shows promise in overcoming TNFα-inhibited osteogenesis and deserves further research. This study demonstrated that melatonin rescued TNFα-inhibited osteogenesis of human mesenchymal stem cells and that the interactions between SMURF1 and SMAD1 mediated the crosstalk between melatonin signaling and TNFα signaling. Additionally, melatonin treatment was found to downregulate TNFα-induced SMURF1 expression and then decrease SMURF1-mediated ubiquitination and degradation of SMAD1 protein, leading to steady bone morphogenetic protein-SMAD1 signaling activity and restoration of TNFα-impaired osteogenesis. Thus, melatonin has prospects for treating osteoporosis caused by inflammatory factors due to its multifaceted functions on regulation of bone formation, bone resorption, and inflammation. Further studies will focus on unveiling the specific mechanisms by which melatonin downregulates SMURF1 expression and confirming the clinical therapeutic value of melatonin in the prevention and therapy of bone loss associated with inflammation.