Epiregulin plays a role in a range of biological activities including malignancies. This study aims to investigate the potential contribution of epiregulin to bone cell differentiation and bone homeostasis. The data showed that epiregulin expression was upregulated during osteogenesis but downregulated during adipogenesis. Functionally, epiregulin promoted osteoblast differentiation while inhibiting adipocyte differentiation from mesenchymal progenitor cells. Epidermal growth factor receptor (EGFR), one of the two known receptors for epiregulin, exerted opposing effects compared to epiregulin. Intriguingly, silencing EGFR almost completely abolished the dysregulation of osteoblast and adipocyte differentiation induced by epiregulin, suggesting that EGFR is indispensable for mediating epiregulin function. Further mechanistic exploration indicated that epiregulin/EGFR signaled via the inactivation of mechanistic target of rapamycin complex 1 (mTORC1) pathway. Moreover, epiregulin downregulated RANKL expression in bone marrow stromal cells (BMSCs) and inhibited the differentiation of bone marrow osteoclast precursor cells into osteoclasts. Treatment of ovariectomized female mice with recombinant epiregulin increased osteoblasts and bone formation, decreased osteoclasts and bone resorption, and ameliorated cancellous bone loss. Consistently, epiregulin treatment improved the potential of BMSCs to differentiate into osteoblasts. Collectively, this study has identified a critical role of epiregulin in regulating osteoblast differentiation through EGFR-mediated inactivation of the mTORC1 pathway, as well as osteoclast differentiation via a mechanism associated with RANKL signaling. Additionally, it highlights the potential of epiregulin as a strategy for combating osteoporosis.