Transferrin receptor 2 (Tfr2) is mainly expressed in the liver and controls iron homeostasis. Here， we identify Tfr2 as a regulator of bone homeostasis that inhibits bone formation. Mice lacking Tfr2 display increased bone mass and mineralization independent of iron homeostasis and hepatic Tfr2. Bone marrow transplantation experiments and studies of cell-specific Tfr2 knockout mice demonstrate that Tfr2 impairs BMP-p38MAPK signaling and decreases expression of the Wnt inhibitor sclerostin specifically in osteoblasts. Reactivation of MAPK or overexpression of sclerostin rescues skeletal abnormalities in Tfr2 knockout mice. We further show that the extracellular domain of Tfr2 binds BMPs and inhibits BMP-2-induced heterotopic ossification by acting as a decoy receptor. These data indicate that Tfr2 limits bone formation by modulating BMP signaling， possibly through direct interaction with BMP either as a receptor or as a co-receptor in a complex with other BMP receptors. Finally， the Tfr2 extracellular domain may be effective in the treatment of conditions associated with pathological bone formation.