Although skeletal progenitors provide a reservoir for bone-forming osteoblasts, the major energy source for their osteogenesis remains unclear. Here, we demonstrate a requirement for mitochondrial oxidative phosphorylation in the osteogenic commitment and differentiation of skeletal progenitors. Deletion of Evolutionarily Conserved Signaling Intermediate in Toll pathways (ECSIT) in skeletal progenitors hinders bone formation and regeneration, resulting in skeletal deformity, defects in the bone marrow niche and spontaneous fractures followed by persistent nonunion. Upon skeletal fracture, Ecsit-deficient skeletal progenitors migrate to adjacent skeletal muscle causing muscle atrophy. These phenotypes are intrinsic to ECSIT function in skeletal progenitors, as little skeletal abnormalities were observed in mice lacking Ecsit in committed osteoprogenitors or mature osteoblasts. Mechanistically, Ecsit deletion in skeletal progenitors impairs mitochondrial complex assembly and mitochondrial oxidative phosphorylation and elevates glycolysis. ECSIT-associated skeletal phenotypes were reversed by in vivo reconstitution with wild-type ECSIT expression, but not a mutant displaying defective mitochondrial localization. Collectively, these findings identify mitochondrial oxidative phosphorylation as the prominent energy-driving force for osteogenesis of skeletal progenitors, governing musculoskeletal integrity.