The development and maintenance of most tissues and organs require the presence of multipotent and unipotent stem cells that have the ability of self-renewal as well as of generating committed, further differentiated cell types. The transcription factor Sox2 is essential for embryonic development and maintains pluripotency and self-renewal in embryonic stem cells. It is expressed in immature osteoblasts/osteoprogenitors in vitro and in vivo and is induced by fibroblast growth factor signaling, which stimulates osteoblast proliferation and inhibits differentiation. Sox2 overexpression can by itself inhibit osteoblast differentiation. To elucidate its function in the osteoblastic lineage, we generated mice with an osteoblast-specific, Cre-mediated knockout of Sox2. These mice are small and osteopenic, and mosaic for Sox2 inactivation. However, culturing calvarial osteoblasts from the mutant mice for 2–3 passages failed to yield any Sox2-null cells. Inactivation of the Sox2 gene by Cre-mediated excision in cultured osteoblasts showed that Sox2-null cells could not survive repeated passage in culture, could not form colonies, and arrested their growth with a senescent phenotype. In addition, expression of Sox2-specific shRNAs in independent osteoblastic cell lines suppressed their proliferative ability. Osteoblasts capable of forming ‘osteospheres’ are greatly enriched in Sox2 expression. These data identify a novel function for Sox2 in the maintenance of self-renewal in the osteoblastic lineage.