There is accumulating evidence that interaction of stromal cell derived factor-1 (SDF-1/CXCL12) with its cognate receptor, CXCR4, generates signals that regulate hematopoietic progenitor cell (HPC) trafficking in the bone marrow. During G-CSF induced HPC mobilization, SDF-1 protein expression in the bone marrow decreases, thereby attenuating CXCR4 signaling. We recently reported that G-CSF treatment induced a decrease in bone marrow SDF-1 mRNA that closely mirrored the fall in SDF-1 protein, suggesting that G-CSF targets one or more SDF-1 producing cell population in the bone marrow. However, the identity of cell populations in the bone marrow that express SDF-1 is controversial. In the present study, we address this issue by sorting cells into mature hematopoietic, hematopoietic progenitor, endothelial, and osteoblast cell populations. Real time RT-PCR analyses showed that osteoblasts and to a lesser degree endothelial cells are the major sources of SDF-1 production in the bone marrow. Surprisingly, on a per cell basis, SDF-1 expression per osteoblast was only modestly (less than two-fold) reduced in mice treated with G-CSF. These data raised the possibility that, rather than affecting SDF-1 expression per osteoblast, G-CSF regulated the number of osteoblasts in the bone marrow. To explore this possibility, osteoblast number in the bone marrow was measured by histomorphometry. Indeed, after 5 days of G-CSF treatment, a significant reduction in the number of endosteal osteoblasts was observed [number of osteoblasts per mm bone perimeter ± SEM: 74.8 ± 13.5 (untreated) versus 33.3 ± 3.8 (G-CSF)]. Moreover, expression of osteocalcin (a specific marker of mature osteoblasts) in the bone marrow was sharply reduced during G-CSF treatment: a 47 ± 12 fold reduction in osteocalcin mRNA (relative to b-actin mRNA) was observed in the bone marrow of G-CSF-treated mice compared with untreated mice. Finally, calcein double-labeling experiments showed that the mineral apposition rate was significantly reduced in G-CSF-treated mice. However, RT-PCR analyses showed that the G-CSF receptor is not expressed on osteoblasts. Accordingly, G-CSF had no direct effect on osteoblast activity in vitro. Collectively, these data show that G-CSF potently suppresses osteoblast number/activity in the bone marrow through an indirect mechanism. Since osteoblasts are thought to play a key role in establishing and maintaining the stem cell niche in the bone marrow, these data raise the possibility that G-CSF, by regulating osteoblast function (including SDF-1 expression), may have profound effects on the stem cell niche that ultimately contribute to HPC mobilization.