NELL-1 is a novel secreted protein associated with premature fusion of cranial sutures in craniosynostosis that has been found to promote osteoblast cell differentiation and mineralization. Our previous study showed that Runx2, the key transcription factor in osteoblast differentiation, transactivates the NELL-1 promoter. In this study, we evaluated the regulatory involvement and mechanisms of Osterix, an essential transcription factor of osteoblasts, in NELL-1 gene expression and function. Promoter analysis showed a cluster of potential Sp1 sites (Sp1/Osterix binding sites) within approximately 70 bp (from -71 to -142) of the 5' flanking region of the human NELL-1 transcriptional start site. Luciferase activity in our NELL-1 promoter reporter systems was significantly decreased in Saos-2 cells when Osterix was overexpressed. Mutagenesis study demonstrated that this suppression is mediated by the Sp1 sites. The binding specificity of Osterix to these Sp1 sites was confirmed in Saos-2 cells and primary human osteoblasts by EMSA in vitro and ChIP assay in vivo. ChIP assay also showed that Osterix downregulated NELL-1 by affecting binding of RNA polymerase II to the NELL-1 promoter, but not by competing with Runx2 binding to the OSE2 sites. Moreover, NELL-1 mRNA levels were significantly decreased when Osterix was overexpressed in Saos-2, U2OS, Hela and Glioma cells. Correspondingly, knockdown of Osterix increased NELL-1 transcription and osteoblastic differentiation in both Saos-2 cells and primary human osteoblasts. These results suggest that Osterix is a direct transcriptional regulator with repressive effect on NELL-1 gene expression, contributing to a delicate balance of regulatory effects on NELL-1 transcription with Runx2, and may play a crucial role in osteoblast differentiation and mineralization. These findings also extend our understanding of the molecular mechanism of Runx2, Osterix, and NELL-1 and demonstrate their crosstalk during osteogenesis.