AbstractSkeletal fracture healing involves a variety of cellular and molecular events; however, the mechanisms behind these processes are not fully understood. In the current study, we investigated the potential involvement of the signal transducer and activator of transcription 1 (STAT1), a critical regulator for both osteoclastogenesis and osteoblast differentiation, in skeletal fracture healing. We used a fracture model and a cortical defect model in mice, and found that fracture callus remodeling and membranous ossification are highly accelerated in STAT1‐deficient mice. Additionally, we found that STAT1 suppresses Osterix transcript levels and Osterix promoter activity in vitro, indicating the suppression of Osterix transcription as one of the mechanisms behind the inhibitory effect of STAT1 on osteoblast differentiation. Furthermore, we found that fludarabine, a potent STAT1 inhibitor, significantly increases bone formation in a heterotopic ossification model. These results reveal previously unknown functions of STAT1 in skeletal homeostasis and may have important clinical implications for the treatment of skeletal bone fracture. © 2010 Orthopaedic Research Society. Published by Wiley Periodicals, Inc. J Orthop Res 28:937–941, 2010