Notch signaling plays a key role in osteoblast differentiation. A major transcriptional downstream regulator of this pathway is the helix-loop-helix (HLH) transcription factor Hairy/Enhancer of Split 1 (Hes-1). Here we investigated the function of Hes-1 in osteoblastic cells. Endogenous Hes-1 gene expression decreases during progression of bone cell phenotype development in MC3T3-E1 osteoblasts suggesting that it is a negative regulator of osteoblast differentiation. Forced expression of Hes-1 inhibits osteocalcin (OC) mRNA levels, and luciferase assays indicate that Hes-1 directly represses OC promoter activity. In vitro and in vivo protein/DNA interaction assays reveal that recombinant Hes-1 binds specifically to an E-box in the proximal promoter of the OC gene. Deletion of the Hes-1 WRPW domain (MHes-1) that recruits the co-repressor Groucho abrogates repression of OC promoter activity by Hes-1, but also blocks Hes-1 binding to the promoter. The latter result suggests that exogenous Hes-1 may be recruited to the OC promoter by both protein/DNA and protein/protein interactions. We conclude that the Notch-responsive Hes-1 protein is capable of repressing OC gene transcription in osteoblastic cells through an E-box in the proximal promoter. Hes-1 may contribute to osteoblast growth and differentiation by controlling basal bone-specific transcription directly through interactions with transcriptional regulators that are known to bind to the OC gene promoter.