Several transcription factors have been identified that control the differentiation of osteoblasts; however, relatively little is known about the signaling pathways involved in regulating the differentiation process. Recently, the canonical Wnt–β-catenin pathway has been implicated in osteoblastogenesis. This review focuses on the role of the canonical Wnt–β-catenin pathway during embryonic development, where it is required for the differentiation of osteoblasts from a precusor that is shared with the chondrocyte lineage and the requirement of this pathway during postnatal life in bone homeostasis. The recent findings covered in this review are major advances in our understanding of skeletal development and promise new therapeutic avenues for tissue engineering and treatment of osteoporosis.