Understanding the pathogenesis of cancer-related bone disease is crucial to the discovery of new therapies. Here we identify activin A, a TGF-β family member, as a therapeutically amenable target exploited by multiple myeloma (MM) to alter its microenvironmental niche favoring osteolysis. Increased bone marrow plasma activin A levels were found in MM patients with osteolytic disease. MM cell engagement of marrow stromal cells enhanced activin A secretion via adhesion-mediated JNK activation. Activin A, in turn, inhibited osteoblast differentiation via SMAD2-dependent distal-less homeobox–5 down-regulation. Targeting activin A by a soluble decoy receptor reversed osteoblast inhibition, ameliorated MM bone disease, and inhibited tumor growth in an in vivo humanized MM model, setting the stage for testing in human clinical trials.