Nuclear factor of activated T-cells (Nfat)c1 to c4 are transcription factors that play an undisputable role in osteoclastogenesis. However, Nfat function in osteoblastic cells is controversial. Constitutive activation of Nfatc1 and c2 in osteoblasts suppresses cell function, although the study of Nfat in vivo has yielded conflicting results. To establish the consequences of Nfatc2 activation in osteoblasts, we generated transgenic mice where a 3.6 kilobase fragment of the collagen type I α1 promoter directs expression of a constitutively active Nfatc2 mutant (Col3.6-Nfatc2). The skeletal phenotype of Col3.6-Nfatc2 mice of both sexes and of sex-matched littermate controls was investigated by microcomputed tomography and histomorphometry. Col3.6-Nfatc2 mice were born at the expected Mendelian ratio and appeared normal. Nfatc2 expression was confirmed in parietal bones from 1 and 3 month old transgenic mice. One month old Col3.6-Nfatc2 female mice exhibited cancellous bone compartment osteopenia secondary to a 30% reduction in bone formation. In contrast, cancellous femoral bone volume and bone formation were not altered in male transgenics, whereas osteoblast number was higher, suggesting incomplete osteoblast maturation. Indices of bone resorption were not affected in either sex. At 3 months of age, the skeletal phenotype evolved; and Col3.6-Nfatc2 male mice exhibited vertebral osteopenia, whereas femoral cancellous bone was not affected in either sex. Nfatc2 activation in osteoblasts had no impact on cortical bone structure. Nfatc2 activation inhibited alkaline phosphatase activity and mineralized nodule formation in bone marrow stromal cell cultures. In conclusion, Nfatc2 activation in osteoblasts inhibits bone formation and causes cancellous bone osteopenia.