Wnt signaling increases bone mass by stimulating osteoblast lineage commitment and expansion and forms the basis for novel anabolic therapeutic strategies being developed for osteoporosis. These strategies include derepression of Wnt signaling by targeting secreted Wnt pathway antagonists, such as sclerostin. However, such therapies are associated with safety concerns regarding an increased risk of osteosarcoma, the most common primary malignancy of bone. Here, we analyzed 5 human osteosarcoma cell lines in a high-throughput screen for epigenetically silenced tumor suppressor genes and identified Wnt inhibitory factor 1 (WIF1), which encodes an endogenous secreted Wnt pathway antagonist, as a candidate tumor suppressor gene. In vitro, WIF1 suppressed beta-catenin levels in human osteosarcoma cell lines, induced differentiation of human and mouse primary osteoblasts, and suppressed the growth of mouse and human osteosarcoma cell lines. Wif1 was highly expressed in the developing and mature mouse skeleton, and, although it was dispensable for normal development, targeted deletion of mouse Wif1 accelerated development of radiation-induced osteosarcomas in vivo. In primary human osteosarcomas, silencing of WIF1 by promoter hypermethylation was associated with loss of differentiation, increased beta-catenin levels, and increased proliferation. These data lead us to suggest that derepression of Wnt signaling by targeting secreted Wnt antagonists in osteoblasts may increase susceptibility to osteosarcoma.