Grifolin, a natural biologically active substance isolated from the edible bodies of the mushroom Albatrellus confluens, has been shown to inhibit proliferation and induce apoptosis in several cancer cell lines. But the mechanisms remain poorly understood. In this study, we investigated the apoptosis-inducing effects and the mechanisms of grifolin on human osteosarcoma cells. Our results demonstrated that grifolin induced concentration- and time-dependent suppression of proliferation and induction of apoptosis in U2OS and MG63 osteosarcoma cell lines. Grifolin induced the release of cytochrome c accompanied by activation of caspase-9, caspase-3 and cleavage of poly (ADP-ribose) polymerase (PARP). In addition, z-VAD-fmk, a universal inhibitor of caspases, prevented caspase-3 activation and PARP cleavage and inhibted grifolin-induced cell growth inhibition. Furthermore, grifolin treatment resulted in a reduction in level of phosphorylated AKT, FOXO transcription factor, and glycogen synthase kinase 3 (GSK3). Knockdown of GSK3 with siRNA inhibited the apoptotic effects of grifolin. On the other hand, grifolin treatment down-regulated the expression of the inhibitor of apoptosis protein(IAP) in both osteosarcoma cells. Taken together, our results suggested that grifolin is able to suppress the phosphorylation of Akt and its substrates FOXO transcription factor and GSK3 in osteosarcoma cells causing the suppression of proliferation and induction of mitochondria- and caspase-dependent apoptosis.