After discovering that lack of Sost/sclerostin expression is the cause of the high bone mass human syndromes Van Buchem disease and sclerosteosis, extensive animal experimentation and clinical studies demonstrated that sclerostin plays a critical role in bone homeostasis and that its deficiency or pharmacological neutralization increases bone formation. Dysregulation of sclerostin expression also underlies the pathophysiology of skeletal disorders characterized by loss of bone mass, as well as the damaging effects of some cancers in bone. Thus, sclerostin has quickly become a promising molecular target for the treatment of osteoporosis and other skeletal diseases, and beneficial skeletal outcomes are observed in animal studies and clinical trials using neutralizing antibodies against sclerostin. However, the anabolic effect of blocking sclerostin decreases with time, bone mass accrual is also accompanied by anti-catabolic effects, and there is bone loss over time after therapy discontinuation. Further, the cellular source of sclerostin in the bone/bone marrow microenvironment under physiological and pathological conditions, the pathways that regulate sclerostin expression and the mechanisms by which sclerostin modulates the activity of osteocytes, osteoblasts, and osteoclasts remain unclear. In this review, we highlight the current knowledge on the regulation of Sost/sclerotin expression and its mechanism(s) of action, discuss novel observations regarding its role in signaling pathways activated by hormones and mechanical stimuli in bone, and propose future research needed to understand the full potential of therapeutic interventions that modulate Sost/sclerostin expression.