The hypophosphatemic (Hyp) mouse is the murine homolog for human hypophosphatemic vitamin D‐resistant rickets. We previously reported that bone cells isolated from normal and Hyp mice produced abnormal bone when transplanted intramuscularly into mutant mice. To assess the role of hypophosphatemia on bone formation in transplants, normal and Hyp mouse periostea were pair transplanted into control or phosphate (P)‐supplemented Hyp mice and into control or P‐deprived normal mice. The bone nodules formed in transplants after 2 weeks were characterized by measuring the thickness of the surrounding osteoid seams and the relative osteoid volume. P restriction in normal recipient mice impaired bone formation by transplanted normal cells and aggravated the defective bone formation by Hyp cells. The osteoid thickness and volume remained significantly higher in Hyp transplants than in normal cotransplants, however. P supplementation of Hyp recipient mice normalized bone formation by transplanted normal cells but not by Hyp cells. However, a marked decrease in osteoid thickness and volume was observed in Hyp transplants down to values observed in normal recipient mice. These results indicate that hypophosphatemia is not the only cause of abnormal bone formation in the Hyp mouse but that an osteoblast dysfunction contributes to the bone disease. These observations further support the concept that the osteoblast may be an important target for the Hyp mutation.