Steroid-induced osteoporosis is a common side effect of long-term treatment with glucocorticoid (GC) drugs. GCs have multiple systemic effects that may influence bone metabolism but also directly affect osteoblasts by decreasing proliferation. This may be beneficial at low concentrations, enhancing differentiation. However, high-dose treatment produces a severe deficit in the proliferative osteoblastic compartment. We provide causal evidence that this effect of GC is mediated by induction of the dual-specificity MAPK phosphatase, MKP-1/DUSP1. Excessive MKP-1 production is both necessary and sufficient to account for the impaired osteoblastic response to mitogens. Overexpression of MKP-1 after either GC treatment or transfection ablates the mitogenic response in osteoblasts. Knockdown of MKP-1 using either immunodepletion of MKP-1 before in vitro dephosphorylation assay or short interference RNA transfection prevents inactivation of ERK by GCs. Neither c-jun N-terminal kinase nor p38 MAPK is activated by the mitogenic cocktail in 20% fetal calf serum, but their activation by a DNA-damaging agent (UV irradiation) was inhibited by either GC treatment or overexpression of MKP-1, indicating regulation of all three MAPKs by MKP-1 in osteoblasts. However, an inhibitor of the MAPK/ERK kinase-ERK pathway inhibited osteoblast proliferation whereas inhibitors of c-jun N-terminal kinase or p38 MAPK had no effect, suggesting that ERK is the MAPK that controls osteoblast proliferation. Regulation of ERK by MKP-1 provides a novel mechanism for control of osteoblast proliferation by GCs.