Wnt signaling plays an important role in skeletal biology and diseases. In osteoblasts, we recently showed that the cell‐cell adhesion molecule N‐cadherin interacts with the Wnt coreceptors LRP5/6 to regulate osteogenesis. In this study we investigated whether targeting the intracellular domain of N‐cadherin that interacts with LRP5/6 may promote Wnt signaling and bone formation. By investigating the molecular interactions between the Wnt coreceptors LRP5/6 and N‐cadherin, we identified specific LRP5/6‐ and N‐cadherin–interacting intracellular domains that impact Wnt/β‐catenin signaling in murine osteoblasts. We showed that truncated N‐cadherin constructs that impair N‐cadherin‐LRP5/6 interactions promote Wnt/β‐catenin signaling and osteoblast differentiation. Based on this finding, we developed a peptide‐based approach targeting N‐cadherin‐LRP5 interaction for promoting Wnt signaling and osteoblast function. We found that a competitor peptide containing the 28 last amino acids of LRP5 disrupts LRP5/6‐N‐cadherin interaction and thereby enhances Wnt/β‐catenin signaling in osteoblasts. We also show that the peptide‐mediated disruption of N‐cadherin‐LRP5/6 interaction increases Wnt/β‐catenin signaling and osteoblast function in vitro and promotes calvaria bone formation in vivo. The targeted competitor peptide‐based strategy reported here may provide a novel approach to stimulate Wnt/β‐catenin signaling that can be used for promoting osteoblast function and bone formation. © 2012 American Society for Bone and Mineral Research.