Epigenetic mechanisms control skeletal development and osteoblast differentiation. Pharmacological inhibition of the histone 3 Lys-27 (H3K27) methyltransferase enhancer of zeste homolog 2 (EZH2) in WT mice enhances osteogenesis and stimulates bone formation. However, conditional genetic loss of Ezh2 early in the mesenchymal lineage (i.e. through excision via Prrx1 promoter– driven Cre) causes skeletal abnormalities due to patterning defects. Here, we addressed the key question of whether Ezh2 controls osteoblastogenesis at later developmental stages beyond patterning. We show that Ezh2 loss in committed pre-osteoblasts by Cre expression via the osterix/Sp7 promoter yields phenotypically normal mice. These Ezh2 conditional knock-out mice (Ezh2 cKO) have normal skull bones, clavicles, and long bones but exhibit increased bone marrow adiposity and reduced male body weight. Remarkably, in vivo Ezh2 loss results in a low trabecular bone phenotype in young mice as measured by micro-computed tomography and histomorphometry. Thus, Ezh2 affects bone formation stage-dependently. We further show that Ezh2 loss in bone marrow– derived mesenchymal cells suppresses osteogenic differentiation and impedes cell cycle progression as reflected by decreased metabolic activity, reduced cell numbers, and changes in cell cycle distribution and in expression of cell cycle markers. RNA-Seq analysis of Ezh2 cKO calvaria revealed that the cyclin-dependent kinase inhibitor Cdkn2a is the most prominent cell cycle target of Ezh2. Hence, genetic loss of Ezh2 in mouse pre-osteoblasts inhibits osteogenesis in part by inducing cell cycle changes. Our results suggest that Ezh2 serves a bifunctional role during bone formation by suppressing osteogenic lineage commitment while simultaneously facilitating proliferative expansion of osteoprogenitor cells.