Osterix (Osx) is an osteoblast-specific transcription factor required for osteoblast differentiation and bone formation. Osx knock-out mice lack bone completely. Recent findings that Osx inhibits Wnt signaling provide a feedback control mechanism involved in bone formation. Mechanisms of Osx inhibition on Wnt signaling are not fully understood. Our results in this study revealed that the expression of a Wnt antagonist Sclerostin (Sost) was downregulated in Osx-null calvaria. Overexpression of Osx in stable C2C12 mesenchymal cell line resulted in Sost upregulation. Transient transfection assay showed that Osx activated 1kb Sost promoter reporter activity in a dose-dependent manner. To define Sost promoter activated by Osx, we made a series of deletion mutants of Sost constructs, and narrowed down the minimal region to the proximal 260bp. Gel shift assay indicated that Osx bound to GC-rich site within this minimal region, and that point mutations of this binding site disrupted Osx binding. Moreover, the same point mutations in 260bp Sost promoter reporter disrupted the promoter activation by Osx, suggesting that the GC-rich binding site was responsible for Sost promoter activation by Osx. To further examine physical association of Osx with Sost promoter in vivo, Chromatin immunoprecipitation (ChIP) assays were performed using primary osteoblasts from mouse calvaria. Osx was found to associate with endogenous Sost promoter. Taken together, these findings support our hypothesis that Sost is a direct target of Osx. This provides a new additional mechanism through which Osx inhibits Wnt signaling during bone formation.