TGF-beta1 is a ubiquitous growth factor that is implicated in the control of proliferation, migration, differentiation, and survival of many different cell types. It influences such diverse processes as embryogenesis, angiogenesis, inflammation, and wound healing. In skeletal tissue, TGF-beta1 plays a major role in development and maintenance, affecting both cartilage and bone metabolism, the latter being the subject of this review. Because it affects both cells of the osteoblast and osteoclast lineage, TGF-beta1 is one of the most important factors in the bone environment, helping to retain the balance between the dynamic processes of bone resorption and bone formation. Many seemingly contradictory reports have been published on the exact functioning of TGF-beta1 in the bone milieu. This review provides an overall picture of the bone-specific actions of TGF-beta1 and reconciles experimental discrepancies that have been reported for this multifunctional cytokine.