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The key signaling networks regulating bone marrow mesenchymal stem cells (BMSCs) are poorly defined. Lgr4, which belongs to the leucine‐rich repeat‐containing G protein‐coupled receptor (LGR) family, is widely expressed in multiple tissues from early embryogenesis to adulthood. We investigated whether Lgr4 functions in BMSCs and in osteogenesis, adipogenesis, and skeletal myoblasts, using mice with a β‐geo gene trap inserted into the Lgr4 gene. Abundant Lgr4 expression was detected in skeletal, adipose and muscular tissue of Lgr4+/– mice at E16.5 by β‐gal staining, and Lgr4‐deficiency promoted BMSC proliferation (16 ± 4 in wild‐type [WT] and 28 ± 2 in Lgr4−/−) using colony forming units‐fibroblast assay, while suppressing BMSC migration (from 103 ± 18 in WT to 57 ± 10 in Lgr4−/−) by transwell migration assay and apoptosis ratio (from 0.0720 ± 0.0123 to 0.0189 ± 0.0051) by annexin V staining assay. Deletion of Lgr4 decreased bone mass (BV/TV from 19.16 ± 2.14 in WT mice to 10.36 ± 1.96 in KO) and fat mass through inhibiting BMSC differentiation to osteoblasts or adipocytes. Furthermore, LGR4‐regulated osteogenic, adipogenic, and myogenic gene expression. Importantly, our data showed that loss of Lgr4‐inhibited fracture healing by suppressing osteoblast differentiation. Moreover, deletion of Lgr4 in BMSCs‐delayed fracture healing following stem cell therapy by BMSC transplantation. Together, our results demonstrated that LGR4 is essential for mesoderm‐derived tissue development and BMSC differentiation, demonstrating that LGR4 could be a promising drug target for related diseases and a critical protein for stem cell therapy. Lgr4 promoted bone mesenchymal stem cell (BMSC) migration and apoptosis and inhibited BMSC proliferation. Lgr4 deficiency led to reduced bone mass and fat mass through inhibiting BMSCs differentiation to osteoblasts or adipocytes. Furthermore, Lgr4 deficiency impaired osteoblast mineralization and healing in bone fracture model, demonstrating that LGR4 could be a promising drug target for related diseases and a critical protein for stem cell therapy. [ABSTRACT FROM AUTHOR]