Gaucher disease (GD) is caused by bi-allelic mutations in GBA1, the gene that encodes acid β-glucocerebrosidase (GCase). Individuals affected by GD have hematologic, visceral and bone abnormalities, and in severe cases there is also neurodegeneration. To shed light on the mechanisms by which mutant GBA1 causes bone disease, we examined the ability of human induced pluripotent stem cells (iPSC) derived from patients with Types 1, 2 and 3 GD, to differentiate to osteoblasts and carry out bone deposition. Differentiation of GD iPSC to osteoblasts revealed that these cells had developmental defects and lysosomal abnormalities that interfered with bone matrix deposition. Compared with controls, GD iPSC-derived osteoblasts exhibited reduced expression of osteoblast differentiation markers, and bone matrix protein and mineral deposition were defective. Concomitantly, canonical Wnt/β catenin signaling in the mutant osteoblasts was downregulated, whereas pharmacological Wnt activation with the GSK3β inhibitor CHIR99021 rescued GD osteoblast differentiation and bone matrix deposition. Importantly, incubation with recombinant GCase (rGCase) rescued the differentiation and bone-forming ability of GD osteoblasts, demonstrating that the abnormal GD phenotype was caused by GCase deficiency. GD osteoblasts were also defective in their ability to carry out Ca2+-dependent exocytosis, a lysosomal function that is necessary for bone matrix deposition. We conclude that normal GCase enzymatic activity is required for the differentiation and bone-forming activity of osteoblasts. Furthermore, the rescue of bone matrix deposition by pharmacological activation of Wnt/β catenin in GD osteoblasts uncovers a new therapeutic target for the treatment of bone abnormalities in GD.