To examine the local actions of IGF signaling in skeletal tissue in a physiological context, we have used Cre-mediated recombination to disrupt selectively in mouse osteoblasts the gene encoding the type 1 IGF receptor (Igf1r). Mice carrying this bone-specific mutation were of normal size and weight but, in comparison with normal siblings, demonstrated a striking decrease in cancellous bone volume, connectivity, and trabecular number, and an increase in trabecular spacing. These abnormalities correlated with a striking decrease in the rate of mineralization of osteoid that occurred despite an unexpected osteoblast and osteoclast hyperactivity, detected from the significant increments in both osteoblast and erosion surfaces. Our findings indicate that IGF1 is essential for coupling matrix biosynthesis to sustained mineralization. This action is likely to be particularly important during the pubertal growth spurt when rapid bone formation and consolidation are required.