We recently found that deletion of the gulonolactone oxidase gene, which is involved in the synthesis of ascorbic acid (AA), was responsible for the fracture phenotype in spontaneous fracture (sfx) mice. To explore the molecular mechanisms by which AA regulates osteoblast differentiation, we examined the effect of AA on osterix expression via NF-E2 related factor-1 (Nrf1) binding to antioxidant response element (ARE) in bone marrow stromal (BMS) cells. AA treatment caused a 6-fold increase in osterix expression in mutant BMS cells at 24 hours, which was unaffected by pretreatment with protein synthesis inhibitor. Sequence analyses of mouse osterix promoter revealed a putative ARE located at -1762 to -1733 upstream of the transcription start site to which Nrf potentially binds. Gel mobility shift assay revealed that nuclear proteins from AA-treated BMS cells bound to radiolabeled ARE much stronger than nuclear extracts from AA-untreated cells. ChIP assay with Nrf1 antibody confirmed the interaction of Nrf1 with mouse osterix promoter. Reporter assay demonstrated that the promoter activity of mouse osterix containing an ARE was stimulated by 4-fold by 48 hr treatment with AA in sfx BMS cells. Treatment of mutant BMS cells with AA resulted in a 3.9-fold increase in the nuclear accumulation of Nrf1. Transfection of mutant BMS cells with Nrf1 siRNA decreased Nrf1 protein by 4.5-fold, blocked AA induction of osterix expression and impaired BMS cell differentiation. Our data provided the first experimental evidence that AA modulated osterix expression via a novel mechanism involving Nrf1 nuclear translocation and Nrf1 binding to ARE to activate genes critical for cell differentiation.