Achondroplasia (ACH) is a short-limbed dwarfism resulting from gain-of-function mutations in fibroblast growth factor receptor 3 (FGFR3). Previous studies have shown that ACH patients have impaired chondrogenesis, but the effects of FGFR3 on bone formation and bone remodeling at adult stages of ACH have not been fully investigated. Using micro-computed tomography and histomorphometric analyses, we found that 2-month-old Fgfr3(G369C/+) mice (mouse model mimicking human ACH) showed decreased bone mass due to reduced trabecular bone volume and bone mineral density, defect in bone mineralization and increased osteoclast numbers and activity. Compared with primary cultures of bone marrow stromal cells (BMSCs) from wild-type mice, Fgfr3(G369C/+) cultures showed decreased cell proliferation, increased osteogenic differentiation including up-regulation of alkaline phosphatase activity and expressions of osteoblast marker genes, and reduced bone matrix mineralization. Furthermore, our studies also suggest that decreased cell proliferation and enhanced osteogenic differentiation observed in Fgfr3(G369C/+) BMSCs are caused by up-regulation of p38 phosphorylation and that enhanced Erk1/2 activity is responsible for the impaired bone matrix mineralization. In addition, in vitro osteoclast formation and bone resorption assays demonstrated that osteoclast numbers and bone resorption area were increased in cultured bone marrow cells derived from Fgfr3(G369C/+) mice. These findings demonstrate that gain-of-function mutation in FGFR3 leads to decreased bone mass by regulating both osteoblast and osteoclast activities. Our studies provide new insight into the mechanism underlying the development of ACH.