VGLL4 has been identified as a YAP inhibitor. However, the exact function of VGLL4 in bone development and bone homeostasis remains unclear. In this study, we demonstrated that VGLL4 breaks TEADs-mediated transcriptional inhibition of RUNX2 to promote osteoblast differentiation and bone development. We found that knockout of VGLL4 in mesenchymal stem cells and preosteoblasts showed osteoporosis and a cleidocranial dysplasia-like phenotype due to osteoblast differentiation disorders. Mechanistically, we showed that the TEAD transcriptional factors severely inhibited osteoblast differentiation in a YAP binding-independent manner. TEADs interacted with RUNX2 to repress RUNX2 transcriptional activity. Furthermore, VGLL4 relieved the transcriptional inhibition of TEADs by directly competing with RUNX2 to bind TEADs through its two TDU domains. Collectively, our studies demonstrate that VGLL4 plays an important role in regulating osteoblast differentiation and bone development, and that TEADs regulate the transcriptional activity of RUNX2, which may shed light on treatment of cleidocranial dysplasia and osteoporosis.