Functional control of the transcription factor Runx2 is crucial for normal bone formation. Runx2 is detectable throughout osteoblast development and maturation and temporally regulates several bone-specific genes. In this study, we identified a novel post-translational mechanism regulating Runx2-dependent activation of the osteocalcin promoter. A functional binding site for the high mobility group protein lymphoid enhancer-binding factor 1 (LEF1) was found adjacent to the proximal Runx2-binding site in the osteocalcin promoter. In transcription assays, LEF1 repressed Runx2-induced activation of the mouse osteocalcin 2 promoter in several osteoblast lineage cell lines. Mutations in the LEF1-binding site increased the basal activity of the osteocalcin promoter; however, the LEF1 recognition site in the osteocalcin promoter was surprisingly not required for LEF1 repression. A novel interaction between the DNA-binding domains of Runx2 and LEF1 was identified and found crucial for LEF1-mediated repression of Runx2. LEF1 is a nuclear effector of the Wnt/LRP5/beta-catenin signaling pathway, which is also essential for osteoblast proliferation and normal skeletal development. A constitutively active beta-catenin enhanced LEF1-dependent repression of Runx2. These data identify a novel mechanism of regulating Runx2 activity in osteoblasts and link Runx2 transcriptional activity to beta-catenin signaling.