While the roles of the mammalian target of rapamycin (mTOR) signaling in regulation of cell growth, proliferation, and survival have been well documented in various cell types, its actions in osteoblasts are poorly understood. In this study, we determined the effects of rapamycin, a specific inhibitor of mTOR, on osteoblast proliferation and differentiation using MC3T3‐E1 preosteoblastic cells (MC‐4) and primary mouse bone marrow stromal cells (BMSCs). Rapamycin significantly inhibited proliferation in both MC‐4 cells and BMSCs at a concentration as low as 0.1 nM. Western blot analysis shows that rapamycin treatment markedly reduced levels of cyclin A and D1 protein in both cell types. In differentiating osteoblasts, rapamycin dramatically reduced osteoblast‐specific osteocalcin (Ocn), bone sialoprotein (Bsp), and osterix (Osx) mRNA expression, ALP activity, and mineralization capacity. However, the drug treatment had no effect on osteoblast differentiation parameters when the cells were completely differentiated. Importantly, rapamycin markedly reduced levels of Runx2 protein in both proliferating and differentiating but not differentiated osteoblasts. Finally, overexpression of S6K in COS‐7 cells significantly increased levels of Runx2 protein and Runx2 activity. Taken together, our studies demonstrate that mTOR signaling affects osteoblast functions by targeting osteoblast proliferation and the early stage of osteoblast differentiation. J. Cell. Biochem. 103: 434–446, 2008. © 2007 Wiley‐Liss, Inc.