Targeted disruption of core binding factor alpha1 (Cbfa1) showed that Cbfa1 is an essential transcription factor in osteoblast differentiation and bone formation. Furthermore, both in vitro and in vivo studies showed that Cbfa1 plays important roles in matrix production and mineralization. However, it remains to be clarified how Cbfa1 controls osteoblast differentiation, bone formation, and bone remodelling. To understand fully the physiological functions of Cbfa1, we generated transgenic mice that overexpressed Cbfa1 in osteoblasts using type I collagen promoter. Unexpectedly, Cbfa1 transgenic mice showed osteopenia with multiple fractures. Cortical bone, which was thin, porous, and enriched with osteopontin, was invaded by osteoclasts, despite the absence of acceleration of osteoclastogenesis. Although the number of neonatal osteoblasts was increased, their function was impaired in matrix production and mineralization. Furthermore, terminally differentiated osteoblasts, which strongly express osteocalcin, and osteocytes were diminished greatly, whereas less mature osteoblasts expressing osteopontin accumulated in adult bone. These data indicate that immature organization of cortical bone, which was caused by the maturational blockage of osteoblasts, led to osteopenia and fragility in transgenic mice, demonstrating that Cbfa1 inhibits osteoblast differentiation at a late stage.