Both estrogen receptor (ER) and peroxisome proliferator-activated receptor gamma (PPARgamma) regulate bone metabolism, and because steroid receptor coactivator (SRC)-2 (TIF-2) enhances ER and PPARgamma activity, we examined the consequences of deletion of SRC-2 on bone using SRC-2 knock out (KO) mice. Loss of SRC-2 resulted in increased bone mass, with SRC-2 KO mice having 80% higher trabecular bone volume as compared with wild type mice. SRC-2 KO mice also had a marked decrease (by 50%) in bone marrow adipocytes. These data suggested that marrow precursor cells in the SRC-2 KO mice may be resistant to the inhibitory effects of endogenous PPARgamma ligands on bone formation. Consistent with this, compared with cultures from wild type mice, marrow stromal cultures from SRC-2 KO mice formed significantly more mineralized nodules (by 3-fold) in the presence of the PPARgamma agonist, rosiglitazone. Using chromatin immunoprecipitation analysis, we demonstrated that in bone marrow stromal cells, loss of SRC-2 leads to destabilization of the transcription complex at the peroxisome proliferator response elements of a number of PPARgamma target genes, resulting in an overall decrease in the expression of adipocyte-related genes and a marked decrease in adipocyte development. Using ovariectomy with or without estrogen replacement, we also demonstrated that SRC-2 KO mice were partially resistant to the skeletal actions of estrogen. Collectively, these findings indicate that loss of SRC-2 leads to partial skeletal resistance to the ER and PPARgamma, but resistance to PPARgamma is dominant, leading to increased bone mass. Modulating SRC-2 action may, thus, represent a novel therapeutic target for osteoporosis.