Osteocytes are the most abundant cells in bone and are ideally located to influence bone turnover through their syncytial relationship with surface bone cells. Osteocyte‐derived signals have remained largely enigmatic, but it was recently reported that human osteocytes secrete sclerostin, an inhibitor of bone formation. Absent sclerostin protein results in the high bone mass clinical disorder sclerosteosis. Here we report that within adult iliac bone, newly embedded osteocytes were negative for sclerostin staining but became positive at or after primary mineralization. The majority of mature osteocytes in mineralized cortical and cancellous bone was positive for sclerostin with diffuse staining along dendrites in the osteocyte canaliculi. These findings provide for the first time in vivo evidence to support the concept that osteocytes secrete sclerostin after they become embedded in a mineralized matrix to limit further bone formation by osteoblasts. Sclerostin did not appear to influence the formation of osteocytes. We propose that sclerostin production by osteocytes may regulate the linear extent of formation and the induction or maintenance of a lining cell phenotype on bone surfaces. In doing so, sclerostin may act as a key inhibitory signal governing skeletal microarchitecture.