Inflammatory cytokines, especially tumor necrosis factor α (TNF-α), have been shown to inhibit osteogenic differentiation of mesenchymal stem cells (MSCs) and bone formation in estrogen deficiency-induced osteoporosis, but the mechanism responsible remains poorly understood. MicroRNAs (miRNAs) have been shown to regulate MSC differentiation. Here, we identified a novel mechanism whereby TNF-α, suppressing the functional axis of a key miRNA (miR-21) contributes to estrogen deficiency-induced osteoporosis. In this study, we screened differentially expressed miRNAs in MSCs derived from estrogen deficiency-induced osteoporosis and found miR-21 was significantly downregulated. miR-21 was suppressed by TNF-α during the osteogenesis of MSCs. Furthermore, miR-21 was confirmed to promote the osteoblast differentiation of MSCs by repressing Spry1, which can negatively regulate the osteogenic differentiation of MSCs. Upregulating miR-21 partially rescued TNF-α-impaired osteogenesis of MSCs. Blocking TNF-α ameliorated the inflammatory environment and significantly enhanced bone formation with increased miR-21 expression and suppressed Spry1 expression in ovariectomized (OVX) mice. Our results revealed a novel function for miR-21 and suggested that suppressed miR-21 may contribute to impaired bone formation by elevated TNF-α in estrogen deficiency-induced osteoporosis. This study may indicate a molecular basis for novel therapeutic strategies against osteoporosis and other inflammatory bone diseases.