Cyclosporin A (CsA) is thought to prevent immune reactions after organ transplantation by inhibiting calcineurin (Cn) and its substrate, the Nuclear Factor of Activated T Cells (NFAT). A dichotomy exists in describing the effects of CsA on bone formation. The concept that the suppression of Cn/NFAT signaling by CsA inhibits bone formation is not entirely supported by many clinical reports and laboratory animal studies. Gender, dosage and basal inflammatory activity have all been suggested as explanations for these seemingly contradictory reports. Here we examine the effects of varying concentrations of CsA on bone formation and osteoblast differentiation and elucidate the role of NFATc1 in this response. We show that low concentrations of CsA (< 1 μM in vitro and 35.5 nM in vivo) are anabolic as they increase bone formation, osteoblast differentiation, and bone mass, while high concentrations (> 1 μM in vitro and in vivo) elicit an opposite and catabolic response. The overexpression of constitutively active NFATc1 inhibits osteoblast differentiation, and treatment with low concentrations of CsA does not ameliorate this inhibition. Treating osteoblasts with low concentrations of CsA (< 1 μM) increases fra-2 gene expression and protein levels in a dose-dependent manner as well as AP-1 DNA-binding activity. Finally, NFATc1 silencing with siRNA increases Fra-2 expression, whereas NFATc1 overexpression inhibits Fra-2 expression. Therefore, NFATc1 negatively regulates osteoblast differentiation, and its specific inhibition may represent a viable anabolic therapy for osteoporosis. © 2007 Elsevier Inc. All rights reserved.