Activating mutations in fibroblast growth factor receptor 2 (FGFR2) cause several craniosynostosis syndromes by affecting the proliferation and differentiation of osteoblasts, which form the calvarial bones. Osteoblasts respond to FGF with increased proliferation and inhibition of differentiation. We analyzed the gene expression profiles of osteoblasts expressing FGFR2 activating mutations (C342Y or S252W) and found a striking down-regulation of the expression of many Wnt target genes and a concomitant induction of the transcription factor Sox2. Most of these changes could be reproduced by treatment of osteoblasts with exogenous FGF. Wnt signals promote osteoblast function and regulate bone mass. Sox2 is expressed in calvarial osteoblasts in vivo and we show that constitutive expression of Sox2 inhibits osteoblast differentiation and causes down-regulation of the expression of numerous Wnt target genes. Sox2 associates with beta-catenin in osteoblasts and can inhibit the activity of a Wnt responsive reporter plasmid through its COOH-terminal domain. Our results indicate that FGF signaling could control many aspects of osteoblast differentiation through induction of Sox2 and regulation of the Wnt-beta-catenin pathway.