The development of the skeleton requires the coordinated activities of bone-forming osteoblasts and bone-resorbing osteoclasts. The activities of these two cell types are likely to be regulated by TGF-beta, which is abundant in bone matrix. We have used transgenic mice to evaluate the role of TGF-beta 2 in bone development and turnover. Osteoblast-specific overexpression of TGF-beta 2 from the osteocalcin promoter resulted in progressive bone loss associated with increases in osteoblastic matrix deposition and osteoclastic bone resorption. This phenotype closely resembles the bone abnormalities seen in human hyperparathyroidism and osteoporosis. Furthermore, a high level of TGF-beta 2 overexpression resulted in defective bone mineralization and severe hypoplasia of the clavicles, a hallmark of the developmental disease cleidocranial dysplasia. Our results suggest that TGF-beta 2 functions as a local positive regulator of bone remodeling and that alterations in TGF-beta 2 synthesis by bone cells, or in their responsiveness to TGF-beta 2, may contribute to the pathogenesis of metabolic bone disease.