The Wnt signaling pathway is a robust regulator of skeletal homeostasis. Gain-of-function mutations promote high bone mass, whereas loss of Lrp5 or Lrp6 co-receptors decrease bone mass. Similarly, mutations in antagonists of Wnt signaling influence skeletal integrity, in an inverse relation to Lrp receptor mutations. Loss of the Wnt antagonist Sclerostin (Sost) produces the generalized skeletal hyperostotic condition of sclerosteosis, which is characterized by increased bone mass and density due to hyperactive osteoblast function. Here we demonstrate that prostaglandin E(2) (PGE(2)), a paracrine factor with pleiotropic effects on osteoblasts and osteoclasts, decreases Sclerostin expression in osteoblastic UMR106.01 cells. Decreased Sost expression correlates with increased expression of Wnt/TCF target genes Axin2 and Tcf3. We also show that the suppressive effect of PGE(2) is mediated through a cyclic AMP/PKA pathway. Furthermore, selective agonists for the PGE(2) receptor EP2 mimic the effect of PGE(2) upon Sost, and siRNA reduction in Ptger2 prevents PGE(2)-induced Sost repression. These results indicate a functional relationship between prostaglandins and the Wnt/β-catenin signaling pathway in bone.