Sex steroids are essential for skeletal development and the maintenance of bone health throughout adult life, and estrogen deficiency at menopause is a major pathogenetic factor in the development of osteoporosis in postmenopausal women. The mechanisms by which the skeletal effects of sex steroids are mediated remain incompletely understood, but in recent years there have been considerable advances in our knowledge of how estrogens and, to a lesser extent androgens, influence bone modeling and remodeling in health and disease. New insights into estrogen receptor structure and function, recent discoveries about the development and activity of osteoclasts, and lessons learned from human and animal genetic mutations have all contributed to increased understanding of the skeletal effects of estrogen, both in males and females. Studies of untreated and treated osteoporosis in postmenopausal women have also contributed to this knowledge and have provided unequivocal evidence for the potential of high-dose estrogen therapy to have anabolic skeletal effects. The development of selective estrogen receptor modulators has provided a new approach to the prevention of osteoporosis and other major diseases of menopause and has implications for the therapeutic use of other steroid hormones, including androgens. Further elucidation of the mechanisms by which sex steroids affect bone thus has the potential to improve the clinical management not only of osteoporosis, both in men and women, but also of a number of other diseases related to sex hormone status.