Transforming growth factor beta-inducible early gene 1 (TIEG1) is a member of the Kruppel-like transcription factor family. To understand the physiological role of TIEG1, we generated TIEG(-/-) (null) mice and found that the TIEG(-/-) mice had increased osteoblast numbers with no increased bone formation parameters. However, when calvarial osteoblasts (OBs) were isolated from neonatal TIEG(-/-) and TIEG(+/+) mice and cultured in vitro, the TIEG(-/-) cells displayed reduced expression of important OB differentiation markers. When the OBs were differentiated in vitro by treatment with bone morphogenic protein 2, the OBs from TIEG(+/+) calvaria displayed several mineralized nodules in culture, whereas those from TIEG(-/-) mice showed no nodules. To characterize the OBs' ability to support osteoclast differentiation, the OBs from TIEG(+/+) and TIEG(-/-) mice were cultured with marrow and spleen cells from TIEG(+/+) mice. Significantly fewer osteoclasts developed when TIEG(-/-) OBs were used to support osteoclast differentiation than when TIEG(+/+) OBs were used. Examination of gene expression in the TIEG(-/-) OBs revealed decreased RANKL and increased OPG expression compared to TIEG(+/+) OBs. The addition of RANKL to these cocultures only partially restored the ability of TIEG(-/-) OBs to support osteoclast differentiation, whereas M-CSF alone or combined with RANKL had no additional effect on osteoclast differentiation. We conclude from these data that TIEG1 expression in OBs is critical for both osteoblast-mediated mineralization and osteoblast support of osteoclast differentiation.