The epithelial–mesenchymal transition (EMT) contributes to the malignant progression of cancer cells including acquisition of the ability to undergo metastasis. However, whereas EMT-related transcription factors (EMT-TF) are known to play an important role in the malignant progression of epithelial tumors, their role in mesenchymal tumors remains largely unknown. We show that expression of the gene for Twist2 is downregulated in human osteosarcoma and correlates inversely with tumorigenic potential in mouse osteosarcoma. Forced expression of Twist2 in highly tumorigenic murine osteosarcoma cells induced a slight inhibition of cell growth in vitro but markedly suppressed tumor formation in vivo. Conversely, knockdown of Twist2 in osteosarcoma cells with a low tumorigenic potential promoted tumor formation in vivo, suggesting that Twist2 functions as a tumor suppressor in osteosarcoma cells. Furthermore, Twist2 induced expression of fibulin-5, which has been reported as a tumor suppressor. Medium conditioned by mouse osteosarcoma cells overexpressing Twist2 inhibited expression of the MMP9 gene as well as invasion in mouse embryonic fibroblasts, and forced expression of Twist2 in osteosarcoma cells suppressed MMP9 gene expression in tumor tissue. Data from the present study suggest that Twist2 inhibits formation of a microenvironment conducive to tumor growth and thereby attenuates tumorigenesis in osteosarcoma.