The Melatonin Osteoporosis Prevention Study (MOPS) demonstrated that nightly melatonin resulted in a time-dependent decrease in equilibrium ratios of serum osteoclasts and osteoblasts in perimenopausal women. This study examines mechanisms related to the ratios of osteoblasts and osteoclasts using coculture models (transwell or layered) of human mesenchymal stem cell (MSC) and human peripheral blood monocytes (PBMCs). Human MSC/PBMC cocultures exposed to melatonin in osteogenic (OS+) medium for 21 days induced osteoblast differentiation and mineralization; however, only in layered cocultures did melatonin inhibit osteoclastogenesis. Melatonin effects were mediated through MT2 melatonin receptors, MEK1/2, and MEK5. In layered but not transwell cocultures, melatonin increased OPG:RANKL ratios by inhibiting RANKL, suggesting that contact with osteoclasts during osteoblastogenesis inhibits RANKL secretion. Melatonin modulated expression of ERK1/2, ERK5, β1 integrin, GLUT4, and IRβ that was dependent upon the type of coculture; however, in both cultures, melatonin increased RUNX2 and decreased PPARγ expression, indicating a role for metabolic processes that control osteogenic vs adipogenic cell fates of MSCs. Furthermore, melatonin also has osteoblast-inducing effects on human adipose-derived MSCs. In vivo, one-year nightly melatonin (15 mg/L) given to neu female mice in their drinking water increased pErk1/2, pErk5, Runx2, and Opg and Rankl levels in bone consistent with melatonin's already reported bone-enhancing effects. Finally, analysis of daily logs from the MOPS demonstrated a significant improvement in mood and perhaps sleep quality in women receiving melatonin vs placebo. The osteoblast-inducing, bone-enhancing effects of melatonin and improvement in quality of life suggest that melatonin is a safe and effective bone loss therapy.