We have previously identified osteoactivin (OA), encoded by Gpnmb, as an osteogenic factor that stimulates osteoblast differentiation in vitro. To elucidate the importance of OA in osteogenesis, we characterized the skeletal phenotype of a mouse model, DBA/2J (D2J) with a loss-of-function mutation in Gpnmb. Microtomography of D2J mice showed decreased trabecular mass, compared to that in wild-type mice [DBA/2J-Gpnmb(+)/SjJ (D2J/Gpnmb(+))]. Serum analysis showed decreases in OA and the bone-formation markers alkaline phosphatase and osteocalcin in D2J mice. Although D2J mice showed decreased osteoid and mineralization surfaces, their osteoblasts were increased in number, compared to D2J/Gpnmb(+) mice. We then examined the ability of D2J osteoblasts to differentiate in culture, where their differentiation and function were decreased, as evidenced by low alkaline phosphatase activity and matrix mineralization. Quantitative RT-PCR analyses confirmed the decreased expression of differentiation markers in D2J osteoblasts. In vitro, D2J osteoblasts proliferated and survived significantly less, compared to D2J/Gpnmb(+) osteoblasts. Next, we investigated whether mutant OA protein induces endoplasmic reticulum stress in D2J osteoblasts. Neither endoplasmic reticulum stress markers nor endoplasmic reticulum ultrastructure were altered in D2J osteoblasts. Finally, we assessed underlying mechanisms that might alter proliferation of D2J osteoblasts. Interestingly, TGF-β receptors and Smad-2/3 phosphorylation were up-regulated in D2J osteoblasts, suggesting that OA contributes to TGF-β signaling. These data confirm the anabolic role of OA in postnatal bone formation.