The periosteum is now widely recognized as a homeostatic and therapeutic target for actions of sex steroids and intermittent PTH administration. The mechanisms by which estrogens suppress but PTH promotes periosteal expansion are not known. In this report, we show that intermittent PTH(1–34) promotes differentiation of periosteal osteoblast precursors as evidenced by the stimulation of the expression or activity of alkaline phosphatase as well as of targets of the bone morphogenetic protein 2 (BMP-2) and Wnt pathways. In contrast, 17β-estradiol (E₂) had no effect by itself. However, it attenuated PTH- or BMP-2-induced differentiation of primary periosteal osteoblast progenitors. Administration of intermittent PTH to ovariectomized mice induced rapid phosphorylation of the BMP-2 target Smad1/5/8 in the periosteum. A replacement dose of E₂ had no effect by itself but suppressed PTH-induced phosphorylation of Smad1/5/8. In contrast to its effects to stimulate periosteal osteoblast differentiation, PTH promoted and subsequently suppressed proliferation of periosteal osteoblast progenitors in vitro and in vivo. E₂ promoted proliferation and attenuated the antiproliferative effect of PTH. Both hormones protected periosteal osteoblasts from apoptosis induced by various proapoptotic agents. These observations suggest that the different effects of PTH and estrogens on the periosteum result from opposing actions on the recruitment of early periosteal osteoblast progenitors. Intermittent PTH promotes osteoblast differentiation from periosteum-derived mesenchymal progenitors through ERK-, BMP-, and Wnt-dependent signaling pathways. Estrogens promote proliferation of early osteoblast progenitors but inhibit their differentiation by osteogenic agents such as PTH or BMP-2.