Estrogen receptor-related receptor ␥ (ERR␥/ERR3/NR3B3) is a member of the orphan nuclear receptor with important functions in development and homeostasis. Recently it has been reported that ERR␣ is involved in osteoblast differentiation and bone formation. In the present study we examined the role of ERR␥ in osteoblast differentiation. Here, we showed that ERR␥ is expressed in osteoblast progenitors and primary osteoblasts, and its expression is increased temporarily by BMP2. Overexpression of ERR␥ reduced BMP2-induced alkaline phosphatase activity and osteocalcin production as well as calcified nodule formation, whereas inhibition of ERR␥ expression significantly enhanced BMP2-induced osteogenic differentiation and mineralization, suggesting that endogenous ERR␥ plays an important role in osteoblast differentiation. In addition, ERR␥ significantly repressed Runx2 transactivity on osteocalcin and bone sialoprotein promoters. We also observed that ERR␥ physically interacts with Runx2 in vitro and in vivo and competes with p300 to repress Runx2 transactivity. Notably, intramuscular injection of ERR␥ strongly inhibited BMP2-induced ectopic bone formation in a dose-dependent manner. Taken together, these results suggest that ERR␥ is a novel negative regulator of osteoblast differentiation and bone formation via its regulation of Runx2 transactivity.Bone formation is a series of well orchestrated lineage-specific differentiation events (1). Osteoblasts, which play key roles in bone formation, are derived from pluripotent mesenchymal stem cells that have the capacity to differentiate into myocytes, adipocytes, and chondrocytes (2). Osteoblasts possess the necessary components to form bone matrix, which allows subsequent mineralization. Several hormones, growth factors, cytokines, and nuclear receptor proteins regulate these sequential events to trigger a complex network of signaling pathways.Bone morphogenetic proteins (BMPs) 5 are members of the transforming growth factor  family and were originally identified by their capacity to induce ectopic bone formation (3, 4). Among the BMP family members, the action of BMP2 has been studied extensively in embryonic skeletal development, postnatal bone remodeling, and bone repair (5, 6). BMP2 promotes the commitment of pluripotent mesenchymal cells to the osteoblast lineage by regulating the signals that stimulate the specific transcriptional programs required for bone formation (5, 7).A master regulator of osteoblasts, Runx2, is indispensable for a skeletal development and maturation. Targeted disruption of Runx2 results in a complete lack of functional osteoblasts (8, 9). Runx2 directly regulates osteoblast-specific genes such as osteocalcin (OC), bone sialoprotein (BSP), osteopontin, and type I collagen through binding to specific DNA enhancer elements of its target gene promoters (4). In addition, Runx2 interacts with a variety of transcription factors (10) and recruits both co-activators (11-13) and co-repressors (14, 15) to form a complex on its target promoter. Theref...