Abstract Mesenchymal stem cell commitment to an osteoprogenitor lineage requires the activity of Runx2, a molecule implicated in the etiopathology of multiple congenital craniofacial anomalies. Through promoter analyses, we have recently identified a new direct transcriptional target of Runx2, Nell-1, a craniosynostosis (CS)–associated molecule with potent osteogenic properties. This study investigated the mechanistic and functional relationship between Nell-1 and Runx2 in regulating osteoblast differentiation. The results showed that spatiotemporal distribution and expression levels of Nell-1 correlated closely with those of endogenous Runx2 during craniofacial development. Phenotypically, cross-mating Nell-1 overexpression transgenic (CMV-Nell-1) mice with Runx2 haploinsufficient (Runx2+/−) mice partially rescued the calvarial defects in the cleidocranial dysplasia (CCD)–like phenotype of Runx2+/− mice, whereas Nell-1 protein induced mineralization and bone formation in Runx2+/− but not Runx2−/− calvarial explants. Runx2-mediated osteoblastic gene expression and/or mineralization was severely reduced by Nell-1 siRNA oligos transfection into Runx2+/+ newborn mouse calvarial cells (NMCCs) or in N-ethyl-N-nitrosourea (ENU)–induced Nell-1−/− NMCCs. Meanwhile, Nell-1 overexpression partially rescued osteoblastic gene expression but not mineralization in Runx2 null (Runx2−/−) NMCCs. Mechanistically, irrespective of Runx2 genotype, Nell-1 signaling activates ERK1/2 and JNK1 mitogen-activated protein kinase (MAPK) pathways in NMCCs and enhances Runx2 phosphorylation and activity when Runx2 is present. Collectively, these data demonstrate that Nell-1 is a critical downstream Runx2 functional mediator insofar as Runx2-regulated Nell-1 promotes osteoblastic differentiation through, in part, activation of MAPK and enhanced phosphorylation of Runx2, and Runx2 activity is significantly reduced when Nell-1 is blocked or absent. © 2011 American Society for Bone and Mineral Research.