Protein related to DAN and cerberus (PRDC) is a secreted protein characterized by a cysteine knot structure, which binds bone morphogenetic proteins (BMPs) and thereby inhibits their binding to BMP receptors. As an extracellular BMP antagonist, PRDC may play critical roles in osteogenesis; however, its expression and function in osteoblastic differentiation have not been determined. Here, we investigated whether PRDC is expressed in osteoblasts and whether it regulates osteogenesis in vitro. PRDC mRNA was found to be expressed in the pre-osteoblasts of embryonic day 18.5 (E18.5) mouse calvariae. PRDC mRNA expression was elevated by treatment with BMP-2 in osteoblastic cells isolated from E18.5 calvariae (pOB cells). Forced expression of PRDC using adenovirus did not affect cell numbers, whereas it suppressed exogenous BMP activity and endogenous levels of phosphorylated Smad1/5/8 protein. Furthermore, PRDC inhibited the expression of bone marker genes and bone-like mineralized matrix deposition in pOB cells. In contrast, the reduction of PRDC expression by siRNA elevated alkaline phosphatase activity, increased endogenous levels of phosphorylated Smad1/5/8 protein, and promoted bone-like mineralized matrix deposition in pOB cells. These results suggest that PRDC expression in osteoblasts suppresses differentiation and that reduction of PRDC expression promotes osteogenesis in vitro. PRDC is accordingly identified as a potential novel therapeutic target for the regulation of bone formation.