Astrocyte elevated gene-1 (AEG-1) is overexpressed in several cancers and plays an important role in cancer progression. However, AEG-1 expression, biological function, and clinical significance in osteosarcoma have not been uncovered. Utilizing manipulated human osteosarcoma cell lines and osteosarcoma tissues, we found that increasing expression of AEG-1 enhanced osteosarcoma cell proliferation and invasion in vitro, and knockdown of AEG-1 significantly attenuated osteosarcoma cell malignancy. Moreover, AEG-1 was overexpressed in osteosarcoma tissues, and overexpression of AEG-1 was strongly associated with gender (p = 0.018), clinical stages (p < 0.001), classification (p < 0.001), metastasis (p = 0.013), differentiation (p < 0.001), and poor survival (p = 0.021). Mechanistic studies conducted in vitro and in vivo revealed that AEG-1-mediated carcinogenesis and invasiveness might be through upregulating MMP-2. Taken together, our data strongly suggest that AEG-1 plays a crucial role in osteosarcoma progression through MMP-2, and AEG-1 could be a useful biomarker for the prediction of osteosarcoma progression and prognosis.