Parathyroid hormone (PTH) stimulates bone remodeling and induces differentiation of bone marrow mesenchymal stromal/stem cells (MSCs) by orchestrating activities of local factors such as bone morphogenetic proteins (BMPs). The activity and specificity of different BMP ligands are controlled by various extracellular antagonists that prevent binding of BMPs to their receptors. Low-density lipoprotein receptor-related protein 6 (LRP6) has been shown to interact with both the PTH and BMP extracellular signaling pathways by forming a complex with parathyroid hormone 1 receptor (PTH1R) and sharing common antagonists with BMPs. We hypothesized that PTH-enhanced differentiation of MSCs into the osteoblast lineage through enhancement of BMP signaling occurs by modifying the extracellular antagonist network via LRP6. In vitro studies using multiple cell lines, including Sca-1+CD45–CD11b–MSCs, showed that a single injection of PTH enhanced phosphorylation of Smad1 and could also antagonize the inhibitory effect of noggin. PTH treatment induced endocytosis of a PTH1R/LRP6 complex and resulted in enhancement of phosphorylation of Smad1 that was abrogated by deletion of PTH1R, β-arrestin, or chlorpromazine. Deletion of LRP6 alone led to enhancement of pSmad1 levels that could not be further increased with PTH treatment. Finally, knockdown of LRP6 increased the exposure of endogenous cell-surface BMP receptor type II (BMPRII) significantly in C2C12 cells, and PTH treatment significantly enhanced cell-surface binding of 125I-BMP2 in a dose- and time-dependent manner, implying that LRP6 organizes an extracellular network of BMP antagonists that prevent access of BMPs to BMP receptors. In vivo studies in C57BL/6J mice and of transplanted green fluorescent protein (GFP)-labeled Sca-1+CD45–CD11b–MSCs into the bone marrow cavity of Rag2−/− immunodeficient mice showed that PTH enhanced phosphorylation of Smad1 and increased commitment of MSCs to osteoblast lineage, respectively. These data demonstrate that PTH enhancement of MSC differentiation to the osteoblast lineage occurs through a PTH- and LRP6-dependent pathway by endocytosis of the PTH1R/LRp6 complex, allowing enhancement of BMP signaling. © 2012 American Society for Bone and Mineral Research.