Osteoporosis is a metabolic bone disease that is characterized by low bone mass resulting from an increase in bone resorption relative to bone formation. The most current therapies for osteoporosis have focused on inhibiting bone resorption by osteoclasts. The purpose of this study is to develop new anabolic agents for treatment of osteoporosis that have fewer risks compared to conventional therapies. We searched the natural products that were derived from the traditional Asian medicines which have been used for treatment of bone related diseases. Icaritin is a flavonoid glycoside derived from the herb Epimedium which has beneficial effects on bone formation. To determine the effect of icaritin on bone formation, we examined the effect of icaritin on MC3T3-E1 cell proliferation and differentiation. For determining the effects of icaritin on proliferation, we performed the MTT assay using MC3T3-E1 cells. To evaluate whether icaritin could promote the osteogenic differentiation of MC3T3-E1 cells, alkaline phosphatase (ALP) activity and mRNA expressions of Runx2, osteocalcin (OCN), RANKL, and osteoprotegerin (OPG) were determined. Icaritin increased MC3T3-E1 cell proliferation. Icaritin increased the ALP activity of MC3T3-E1 cells on 72 hour culture in osteogenic media. mRNA expression of Runx2 was increased after 24 hour culture with icaritin. mRNA expression of osteocalcin was increased after 72 hour culture with icaritin. In addition, icaritin increased the mRNA expressions of OPG and RANKL. However, icaritin increased the mRNA expression of OPG much more than that of RANKL, and then, it increased the OPG/RANKL ratio. These results suggest that icaritin promotes osteogenic differentiation of osteoblasts and decreases osteoclast formation regulated by osteoblasts.