Protein tyrosine phosphatases (PTPs) are pivotal regulators of key cellular functions, including cell growth, differentiation, and adhesion. Previously, we reported that leukocyte common antigen-related (LAR) tyrosine phosphatase promotes osteoblast differentiation in MC3T3-E1 preosteoblast cells. In the present study, the mechanism of the regulatory action of LAR on osteoblast differentiation was investigated. The mineralization of extracellular matrix and calcium accumulation in MC3T3-E1 cells were markedly enhanced by LAR overexpression, and these effects were further increased by treatment with an MEK inhibitor. In addition, LAR overexpression dramatically reduced extracellular signal-regulated kinase (Erk) activation during osteoblast differentiation. In contrast, a marginal effect of the inactive LAR mutant on Erk activation was detected. Expression of osteoblast-related genes such as ALP, BSP, DLX5, OCN, and RUNX2, was increased by LAR overexpression during osteoblast differentiation. On the basis of these results, we propose that LAR functions as a positive regulator of osteoblast differentiation by modulating ERK activation. Therefore, LAR phosphatase could be used as a novel regulatory target protein in many bone-associated diseases, including osteoporosis.