Inflammatory cytokines, especially tumor necrosis factor α (TNF-α), have been shown to inhibit osteogenic differentiation of mesenchymal stem cells (MSCs) and bone formation in estrogen deficiency–induced osteoporosis, but the mechanism responsible remains poorly understood. MicroRNAs (miRNAs) have been shown to regulate MSC differentiation. Here, we identified a novel mechanism whereby TNF-α, suppressing the functional axis of a key miRNA (miR-21) contributes to estrogen deficiency–induced osteoporosis. In this study, we screened differentially expressed miRNAs in MSCs derived from estrogen deficiency-induced osteoporosis and found miR-21 was significantly downregulated. miR-21 was suppressed by TNF-α during the osteogenesis of MSCs. Furthermore, miR-21 was confirmed to promote the osteoblast differentiation of MSCs by repressing Spry1, which can negatively regulate the osteogenic differentiation of MSCs. Upregulating miR-21 partially rescued TNF-α–impaired osteogenesis of MSCs. Blocking TNF-α ameliorated the inflammatory environment and significantly enhanced bone formation with increased miR-21 expression and suppressed Spry1 expression in ovariectomized (OVX) mice. Our results revealed a novel function for miR-21 and suggested that suppressed miR-21 may contribute to impaired bone formation by elevated TNF-α in estrogen deficiency–induced osteoporosis. This study may indicate a molecular basis for novel therapeutic strategies against osteoporosis and other inflammatory bone diseases. © 2013 American Society for Bone and Mineral Research.