Runx2, required for bone formation, is ectopically expressed in breast cancer cells. To address the mechanism by which Runx2 contributes to the osteolytic disease induced by MDA-MB-231 cells, we investigated the effect of Runx2 on key components of the "vicious cycle" of transforming growth factor beta (TGFbeta)-mediated tumor growth and osteolysis. We find that Runx2 directly up-regulates Indian Hedgehog (IHH) and colocalizes with Gli2, a Hedgehog signaling molecule. These events further activate parathyroid hormone-related protein (PTHrP). Furthermore, Runx2 directly regulates the TGFbeta-induced PTHrP levels. A subnuclear targeting deficient mutant Runx2, which disrupts TGFbeta-induced Runx2-Smad interactions, failed to induce IHH and downstream events. In addition, Runx2 knockdown in MDA-MB-231 inhibited IHH and PTHrP expression in the presence of TGFbeta. In vivo blockade of the Runx2-IHH pathway in MDA-MB-231 cells by Runx2 short hairpin RNA inhibition prevented the osteolytic disease. Thus, our studies define a novel role of Runx2 in up-regulating the vicious cycle of metastatic bone disease, in addition to Runx2 regulation of genes related to progression of tumor metastasis.