We describe the effects of the overexpression of noggin, a bone morphogenetic protein (BMP) inhibitor, on osteoblast differentiation and bone formation. Cells of the osteoblast and chondrocyte lineages, as well as bone marrow macrophages, showed intense beta-gal histo- or cytostaining in adult noggin+/- mice that had a LacZ transgene inserted at the site of noggin deletion. Despite identical BMP levels, however, osteoblasts of 20-month-old C57BL/6J and 4-month-old senescence-accelerated mice (SAM-P6 mice) had noggin expression levels that were approximately fourfold higher than those of 4-month-old C57BL/6J and SAM-R1 (control) mice, respectively. U-33 preosteoblastic cells overexpressing the noggin gene showed defective maturation and, in parallel, a decreased expression of Runx-2, bone sialoprotein, osteocalcin, and RANK-L. Noggin did not inhibit the ligandless signaling and pro-differentiation action of the constitutively activated BMP receptor type 1A, ca-ALK-3. Transgenic mice overexpressing noggin in mature osteocalcin-positive osteoblasts showed dramatic decreases in bone mineral density and bone formation rates with histological evidence of decreased trabecular bone and CFU-osteoblast colonies at 4 and 8 months. Together, the results provide compelling evidence that noggin, expressed in mature osteoblasts, inhibits osteoblast differentiation and bone formation. Thus, the overproduction of noggin during biological aging may result in impaired osteoblast formation and function and hence, net bone loss.