SP7/Osterix (OSX) is a master regulatory transcription factor that activates a variety of genes during differentiation of osteoblasts. However, the influence of post-translational modifications on the regulation of its transactivation activity is largely unknown. Here, we report that sirtuins, which are NAD(+)-dependent deacylases, regulate lysine deacylation-mediated transactivation of OSX. Germline Sirt7 knockout mice develop severe osteopenia characterized by decreased bone formation and an increase of osteoclasts. Similarly, osteoblast-specific Sirt7 knockout mice showed attenuated bone formation. Interaction of SIRT7 with OSX leads to the activation of transactivation by OSX without altering its protein expression. Deacylation of lysine (K) 368 in the C-terminal region of OSX by SIRT7 promote its N-terminal transactivation activity. In addition, SIRT7-mediated deacylation of K368 also facilitates depropionylation of OSX by SIRT1, thereby increasing OSX transactivation activity. In conclusion, our findings suggest that SIRT7 has a critical role in bone formation by regulating acylation of OSX.