The osteoblast is the bone-forming cell. The molecular basis of osteoblast-specific gene expression and differentiation begin to be understood. Following the characterization of OSE2, an osteoblast-specific cis-acting element present in the Osteocalcin promoter Osf2/Cbfa1, the protein that binds to OSE2, was identified. Osf2/Cbfa1 is a member of the runt family of transcription factors. Its expression is initiated in the mesenchymal condensations of the developing skeleton and is strictly restricted to cells of the osteoblast lineage thereafter. Osf2/Cbfa1 binds to and regulates the expression of multiple genes expressed in osteoblasts, and forced expression of Osf2/Cbfa1 in nonosteoblastic cells induces the expression of the principal osteoblast-specific genes. Osf2/Cbfa1 gene inactivation in mice leads to failure of mesenchymal progenitor cells to differentiate into osteoblasts. Lastly, heterozygous mutations in the Osf2/Cbfa1 gene cause Cleidocranial dysplasia in human and mice, a condition marked by generalized bone defects. These result demonstrate that Osf2/Cbfa1 is an osteoblast-specific transcriptional activator of osteoblast differentiation whose function is non redundant with the function of other gene products during development.