Androgens are anabolic hormones that affect many tissues, including bone. However, an anabolic effect of androgen treatment on bone in eugonadal subjects has not been observed and clinical trials have been disappointing. The androgen receptor (AR) mediates biological responses to androgens. In bone tissue, both AR and the estrogen receptor (ER) are expressed. Since androgens can be converted into estrogen, the specific role of the AR in maintenance of skeletal homoeostasis remains controversial. The goal of this study was to use skeletally targeted overexpression of AR in differentiated osteoblasts as a means of elucidating the specific role(s) for AR transactivation in the mature bone compartment. Transgenic mice overexpressing AR under the control of the 2.3-kb alpha1(I)-collagen promoter fragment showed no difference in body composition, testosterone, or 17ss-estradiol levels. However, transgenic males have reduced serum osteocalcin, CTx and TRAPC5b levels, and a bone phenotype was observed. In cortical bone, high-resolution micro-computed tomography revealed no difference in periosteal perimeter but a significant reduction in cortical bone area due to an enlarged marrow cavity. Endocortical bone formation rate was also significantly inhibited. Biomechanical analyses showed decreased whole bone strength and quality, with significant reductions in all parameters tested. Trabecular morphology was altered, with increased bone volume comprised of more trabeculae that were closer together but not thicker. Expression of genes involved in bone formation and bone resorption was significantly reduced. The consequences of androgen action are compartment-specific; anabolic effects are exhibited exclusively at periosteal surfaces, but in mature osteoblasts androgens inhibited osteogenesis with detrimental effects on matrix quality, bone fragility and whole bone strength. Thus, the present data demonstrate that enhanced androgen signaling targeted to bone results in low bone turnover and inhibition of bone formation by differentiated osteoblasts. These results indicate that direct androgen action in mature osteoblasts is not anabolic, and raise concerns regarding anabolic steroid abuse in the developing skeleton or high-dose treatment in eugonadal adults.