Growing evidence shows that the inhibitory effect of inflammatory cytokines on new bone formation by osteogenic precursor cells is a critical cause of net bone‐density reduction. Melatonin has been proven to be a potential therapeutic candidate for osteoporosis. However, whether it is capable of antagonizing the suppressing effect of inflammatory cytokines on osteogenic precursor cells is so far elusive. In this study, using the cell culture system of human bone marrow stromal cells and MC3T3‐E1 preosteoblasts, we recorded the following vital observations that provided insights of melatonin‐induced bone formation: 1) melatonin induced bone formation in both normal and inflammatory conditions; 2) Wnt4 was essential for melatonin‐induced bone formation in inflammatory stimulation; 3) melatonin‐ and Wnt4‐induced bone formation occurred via activation of β‐catenin and p38‐JNK MAPK pathways by interaction with a distinct frizzled LDL receptor‐related protein complex; 4) melatonin suppressed the inhibitory effect of NF‐κB on osteogenesis in a Wnt4‐dependent manner; and 5) melatonin induced Wnt4 expression through the ERK1/2‐Pax2‐Egr1 pathway. In summary, we showed a novel mechanism of melatonin‐induced bone formation in an inflammatory environment. Melatonin‐induced Wnt4 expression is essential for its osteoinductive effect and the inhibitory effect of NF‐κB on bone formation. Our novel findings may provide useful information for its potential translational application.—Li, X., Li, Z., Wang, J., Li, Z., Cui, H., Dai, G., Chen, S., Zhang, M., Zheng, Z., Zhan, Z., Liu, H. Wnt4 signaling mediates protective effects of melatonin on new bone formation in an inflammatory environment. FASEB J. 33, 10126–10139 (2019). http://www.fasebj.org