How lineage specifiers are regulated during development is an outstanding question, and the molecular regulation of osteogenic factor RUNX2 remains to be fully understood. Here we report that the Mediator subunit MED23 cooperates with RUNX2 to regulate osteoblast differentiation and bone development. Med23 deletion in mesenchymal stem cells or osteoblast precursors results in multiple bone defects similar to those observed in Runx2(+/-) mice. In vitro, Med23-deficient progenitor cells are refractory to osteoblast differentiation, and Med23 deficiency reduces Runx2-target gene activity without changing Runx2 expression. Mechanistically, MED23 binds to RUNX2 and modulates its transcriptional activity. Moreover, Med23 deficiency in osteoprogenitor cells exacerbates the skeletal abnormalities observed in Runx2(+/-) mice. Collectively, our results establish a genetic and physical interaction between RUNX2 and MED23, suggesting that MED23 constitutes a molecular node in the regulatory network of anabolic bone formation and related diseases.