Cherubism is an autosomal dominant disorder in children characterized by unwarranted symmetrical bone resorption of the jaws with fibrous tissue deposition. Mutations causing cherubism have been identified in the adaptor protein SH3BP2. Knock-in mice with a Pro416Arg mutation in Sh3bp2 exhibit a generalized osteoporotic bone phenotype. In this study, we examined the effects of this “cherubism” mutation on spectroscopic indices of “bone quality” and on osteoblast differentiation. Fourier-transform infrared imaging (FTIRI) analysis of femurs from wild-type and Sh3bp2 knock-in mice showed decreased mineral content, decreased mineral crystallinity/crystal size, and increased collagen maturity in homozygous mutants. To assess osteoblast maturation in vivo, knock-in mice were crossed with transgenic mice over-expressing GFP driven by 3.6-kb or 2.3-kb Col1a1 promoter fragments. Reduced numbers of mature osteoblasts were observed in homozygous mice. Neonatal calvarial cultures, which were enriched for osteoblasts by depletion of hematopoietic cells (negative selection for Ter119- and CD45-positive cells) were investigated for osteoblast-specific gene expression and differentiation, which demonstrated that differentiation and mineralization in homozygous osteoblast cultures was impaired. Co-cultures with calvarial osteoblasts and bone marrow macrophages showed that mutant osteoblasts appear to increase osteoclastogenesis resulting in increased bone resorption on bone chips. In summary, the Sh3bp2 mutation in cherubism mice alters bone quality, reduces osteoblast function, and may contribute to excessive bone resorption by osteoclasts. Our data, together with previous osteoclast studies, demonstrate a critical role of Sh3bp2 in bone remodeling and osteoblast differentiation.