Mutations in sclerostin function or expression cause sclerosing bone dysplasias, involving decreased antagonism of Wnt/Lrp5 signaling. Conversely, deletion of the VHL tumor suppressor in osteoblasts, which stabilize HIF-α isoforms and thereby enables HIF-α/β-driven gene transcription, increases bone mineral content and cross-sectional area compared to wild-type controls. We examined the influence of cellular hypoxia (1% oxygen) upon sclerostin expression and canonical Wnt signaling. Osteoblasts and osteocytes cultured under hypoxia revealed decreased sclerostin transcript and protein, and increased expression and nuclear localization of activated β-catenin. Similarly, both hypoxia and the hypoxia mimetic DFO increased β-catenin gene reporter activity. Hypoxia and its mimetics increased expression of the BMP antagonists gremlin and noggin and decreased Smad-1/5/8 phosphorylation. As a partial explanation for the mechanism of regulation of sclerostin by oxygen, MEF2 reporter assays revealed decreased activity. Modulation of VEGF signaling under normoxia or hypoxia revealed no influence upon Sost transcription. These data suggest that hypoxia inhibits sclerostin expression, through enhanced antagonism of BMP signaling independent of VEGF. J. Cell. Biochem. 110: 457–467, 2010. © 2010 Wiley-Liss, Inc.