Neuropeptide Y (NPY) has been shown to play a critical role in the regulation of bone metabolism by signalling via Y1 and Y2 receptors. Centrally, hypothalamic Y2 but not Y1 receptors are important for the action of NPY on bone formation and osteoblast activity. This project investigates how the NPY system, in particular, the Y1 receptor, influences bone metabolism peripherally by examining a range of conditional and germline knockout mice using in vitro and in vivo techniques. Revealing the possibility of a direct role for the Y1 receptor on bone cells, we demonstrate the presence of Y1 but not Y2 receptor mRNA in osteoblasts by in situ hybridisation on femur sections and RT-PCR on bone marrow stromal cells (BMSCs). In addition, we show that NPY mRNA is also expressed by osteoblasts suggesting that locally produced NPY may directly influence bone cell activity. In order to investigate the role of osteoblastic Y1 receptors, mice with selective osteoblastic deletion of the Y1 receptor under control of the osteoblast-specific α1(I)-collagen promotor were generated. In male mice, osteoblast-specific Y1 receptor deletion resulted in a marked increase in femoral trabecular bone volume, trabecular number, cortical bone volume and cortical thickness due to elevated osteoblast activity as shown by increased mineral apposition rate and bone formation rate. Further in vitro investigations using cells isolated from germline and conditional knockout mice demonstrated that NPY inhibits the proliferation of BMSCs via the Y1 receptor and that mineralisation is enhanced in vitro in the absence of NPY or osteoblastic Y1 receptors. Moreover, this study reveals a critical role for the NPY system via Y1 receptors in the proliferation and differentiation of mesenchymal stem cells and osteoprogenitor cells. Together these data demonstrate a direct role for the NPY system via Y1 receptors on the proliferation and differentiation of osteoblastic progenitor cells as well as on regulating the activity of mature osteoblasts, thereby altering bone formation both in vitro and in vivo. Understanding the action of NPY on osteoblasts to regulate bone metabolism could have powerful therapeutic implications for stimulating bone accrual in diseases such as osteoporosis.