The extraction of bitumen from surface mining in the Athabasca Oil Sands Region (AOSR) produces large quantities of oil sands process‐affected water (OSPW) that needs to be stored in settling basins near extraction sites. Chemical constituents of OSPW are known to impair bone health in some organisms, which can lead to increased fracture risk and lower reproductive fitness. Naphthenic acid fraction components (NAFCs) are thought to be among the most toxic class of compounds in OSPW; however, the effect of NAFCs on osteoblast development is largely unknown. In this study, we demonstrate that NAFCs from OSPW inhibit osteoblast differentiation and deposition of extracellular matrix, which is required for bone formation. Extracellular matrix deposition was inhibited in osteoblasts exposed to 12.5–125 mg/L of NAFC for 21 days. We also show that components within NAFCs inhibit the expression of gene markers of osteoblast differentiation and function, namely, alkaline phosphatase (Alp), osteocalcin, and collagen type 1 alpha 1 (Col1a1). These effects were partially mediated by the induction of glucocorticoid receptor (GR) activity; NAFC induces the expression of the GR activity marker genes Sgk1 (12.5 mg/L) and p85a (125 mg/L) and inhibits GR protein (125 mg/L) and Opg RNA (12.5 mg/L) expression. This study provides evidence that NAFC concentrations of 12.5 mg/L and above can directly act on osteoblasts to inhibit bone formation and suggests that NAFCs contain components that can act as GR agonists, which may have further endocrine disrupting effects on exposed wildlife.