Bone is constantly formed and resorbed throughout life by coordinated actions of osteoblasts and osteoclasts. However, the molecular mechanisms involved in osteoblast function remain incompletely understood. Here we show, for the first time, that the peptidyl-prolyl isomerase PIN1 controls the osteogenic activity of osteoblasts. Pin1 null mice exhibited an age-dependent decrease in bone mineral density and trabecular bone formation without alteration in cortical bone. Further analysis identified a defect in BMP signaling in Pin1 null osteoblasts but normal osteoclast function. PIN1 interacted with SMAD5 and was required for the expression by primary osteoblasts of osteoblast specific transcription factors (CBFA1 and OSX), ECM (collagen I and OCN) and the formation of bone nodules. Our results thus uncover a novel aspect of the molecular underpinning of osteoblast function and identify a new therapeutic target for bone diseases.