Steroid-induced osteoporosis is a common side-effect of long-term treatment with glucocorticoid (GC) drugs. GCs have multiple systemic effects that may influence bone metabolism but also directly affect osteoblasts by decreasing proliferation. This may be beneficial at low concentrations, enhancing differentiation. However, high dose treatment produces a severe deficit in the proliferative osteoblastic compartment. We provide causal evidence that this effect of GC is mediated by induction of the dual-specificity mitogen-activated protein kinase (MAPK) phosphatase, MKP-1/DUSP1. Excessive MKP-1 production is both necessary and sufficient to account for the impaired osteoblastic response to mitogens. Overexpression of MKP-1 following either GC treatment or transfection ablates the mitogenic response in osteoblasts. Knockdown of MKP-1 using either immunodepletion of MKP-1 prior to in vitro dephosphorylation assay or siRNA transfection prevents inactivation of ERK by GCs. Neither JNK nor p38 MAPK are activated by the mitogenic cocktail in 20% FCS but their activation by a DNA-damaging agent (UV irradiation) was inhibited by either GC treatment or over-expression of MKP-1, indicating regulation of all three MAPKs by MKP-1 in osteoblasts. However, an inhibitor of the MEK-ERK pathway inhibited osteoblast proliferation while inhibitors of JNK or p38 MAPK had no effect, suggesting that ERK is the MAP kinase that controls osteoblast proliferation. Regulation of ERK by MKP-1 provides a novel mechanism for control of osteoblast proliferation by glucocorticoids.