Fam3c, a cytokine-like protein, is a member of the Fam3 family (family with sequence similarity 3) and has been implicated to play a crucial role in Epithelial-to- mesenchymal transition (EMT) and subsequent metastasis during cancer progression. A few independent genome-wide association studies on different population cohorts predicted the gene locus of Fam3c to be associated with bone mineral density and fractures. In this study, we examined the role of Fam3c during osteoblast differentiation. Fam3c was found to be expressed during osteogenic differentiation of both primary bone marrow stromal cells and MC3T3-E1 pre-osteoblasts. In differentiating osteoblasts, knockdown of Fam3c increased alkaline phosphatase expression and activity whereas overexpression of Fam3c reduced it. Furthermore, overexpression of Fam3c caused reduction of Runx2 expression at both mRNA and protein levels. Fam3c was localized in the cytoplasm and it was not secreted outside the cell during osteoblast differentiation and therefore, may function intracellularly. Furthermore, Fam3c and TGF-β1 were found to regulate each other reciprocally. Our findings therefore suggest a functional role of Fam3c in the regulation of osteoblast differentiation.