Bone modeling can be modulated by lipid signals such as arachidonic acid (AA) and its cyclooxygenase 2 (COX2) metabolite, prostaglandin E2 (PGE2), which are recognized mediators of optimal bone formation. Hydrolysis of AA from membrane glycerophospholipids is catalyzed by phospholipases A2 (PLA2s). We reported that mice deficient in the Ca2+- independent PLA2beta (iPLA2β), encoded by Pla2g6, exhibit a low bone phenotype, but the cause for this remains to be identified. Here, we examined the mechanistic and molecular roles of iPLA2β in bone formation using bone marrow stromal cells and calvarial osteoblasts from WT and iPLA2β-deficient mice, and the MC3T3-E1 osteoblast precursor cell line. Our data reveal that transcription of osteogenic factors (Bmp2, Alpl, and Runx2) and osteogenesis are decreased with iPLA2β-deficiency. These outcomes are corroborated and recapitulated in WT cells treated with a selective inhibitor of iPLA2 β (10 μM S-BEL), and rescued in iPLA2β-deficient cells by additions of 10 μM PGE2. Further, under osteogenic conditions we find that PGE2 production is through iPLA2β activity and that this leads to induction of Runx2 and iPLA2β transcription. These findings reveal a strong link between osteogenesis and iPLA2β-derived lipids and raise the intriguing possibility that iPLA2β-derived PGE2 participates in osteogenesis and in the regulation of Runx2 and also iPLA2β.