Glucocorticoids (GCs) are in widespread use to treat inflammatory bone diseases, such as rheumatoid arthritis (RA). Their anti‐inflammatory efficacy, however, is accompanied by deleterious effects on bone, leading to GC‐induced osteoporosis (GIO). These effects include up‐regulation of the receptor activator of NF‐κB ligand/osteoprotegerin (RANKL/OPG) ratio to promote bone‐resorbing osteoclasts and include inhibition of bone‐forming osteoblasts. We previously identified suppression of osteoblast differentiation by the monomer glucocorticoid receptor (GR) via the inhibition of Il11 expression as a crucial mechanism for GIO. Here we show that the GR‐modulating substance compound A (CpdA), which does not induce GR dimerization, still suppresses proinflammatory cytokines in fibroblast‐like synovial cells from patients with RA and in osteoblasts. In contrast to the full GR agonist dexamethasone, it does not unfavorably alter the RANKL/OPG ratio and does not affect Il11 expression and subsequent STAT3 phosphorylation in these cells. Notably, while dexamethasone inhibits osteoblast differentiation, CpdA does not affect osteoblast differentiation in vitro and in vivo. We describe here for the first time that selective GR modulators can act against inflammation, while not impairing osteoblast differentiation.—Rauch, A., Gossye, V., Bracke, D., Gevaert, E., Jacques, P., Van Beneden, K., Vandooren, B., Rauner, M., Hofbauer, L. C., Haegeman, G., Elewaut, D., Tuckermann, J. P., De Bosscher, K. An anti‐inflammatory selective glucocorticoid receptor modulator preserves osteoblast differentiation. FASEB J. 25, 1323–1332 (2011). www.fasebj.org