Multiple myeloma (MM) develops devastating bone destruction with enhanced bone resorption and suppressed bone formation. In contrast to enhanced osteoclastogenesis, little is known about the mechanism of impaired bone formation in MM. Because a canonical Wingless-type (Wnt) signaling pathway has recently been shown to play an important role in osteoblast differentiation, we examined whether MM cells affect a canonical Wnt pathway to suppress bone formation. Conditioned media from RPMI8226 and U266 MM cell lines and primary MM cells suppressed in vitro mineralization as well as alkaline phosphatase activity in osteoblasts induced by bone morphogenetic protein 2 (BMP-2). These cell lines constitutively produced a soluble Wnt inhibitor, secreted Frizzled-related protein 2 (sFRP-2), but not other Wnt inhibitors including sFRP-1, sFRP-3, and dickkopf 1 (DKK-1) at the protein level. Most MM cells from patients with advanced bone destructive lesions also expressed sFRP-2. Furthermore, exogenous sFRP-2 suppressed osteoblast differentiation induced by BMP-2, and immunodepletion of sFRP-2 significantly restored mineralized nodule formation in vitro, suggesting a predominant role for MM cell-derived sFRP-2 in the impairment of bone formation by MM. Thus, in addition to enhanced osteolysis, MM cells also suppress bone formation at least in part through an inhibition of the canonical Wnt pathway by secreting sFRP-2.