UNLABELLED: This study mainly explored the potential mechanism of Huangqi Guizhi Wuwu Decoction (HGWD) in the treatment of osteoarthritis (OA) based on network pharmacology, and to investigate whether HGWD promotes osteogenic differentiation of bone marrow mesenchymal stem cells (BMSCs) by upregulating ESR1 based on in vitro experiments. The core target genes and potential signaling pathways related to HGWD in OA treatment were analyzed using network pharmacology analysis. BMSCs were isolated from rats to induce for adipogenic/osteogenic differentiation, which were assessed by Oil Red O staining and Alizarin Red staining, respectively. ESR1 knockdown lentivirus was transfected into BMSCs and different concentrations of rat HGWD-containing serum was prepared to treat BMSCs. Cell proliferation activity was measured by CCK-8 assay to select the optimal concentration for further experiments. Cells were treated with 10% HGWD-containing serum and transfected with ESR1 knockdown lentivirus. Osteogenic differentiation was assessed by ALP staining, ALP activity measurement, and Alizarin Red staining. The expression of osteogenic differentiation-related genes OCN, RUNX2, and COL1A1 was detected by qRT-PCR and Western blot. Network pharmacology analysis revealed that ESR1 is one of the core targets of HGWD in OA treatment. HGWD-containing serum promoted proliferation and osteogenic differentiation ability of BMSCs, and also increased ESR1 expression. The promoting effects of HGWD-containing serum on proliferation and osteogenic differentiation were partially polished in response to ESR1 knockdown in BMSCs. Based on the collective evidence, the therapeutic effects of HGWD in OA may be achieved by promoting osteogenic differentiation of BMSCs via upregulating ESR1 expression. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s10616-025-00773-z.