Insulin-like growth factor 1 (IGF-1), the most abundant growth factor in the bone matrix, maintains bone mass in adulthood. We now report that IGF-1 released from the bone matrix during bone remodeling stimulates osteoblastic differentiation of recruited mesenchymal stem cells (MSCs) by activation of mammalian target of rapamycin (mTOR), thus maintaining proper bone microarchitecture and mass. Mice with knockout of the IGF-1 receptor (Igf1r) in their pre-osteoblastic cells showed lower bone mass and mineral deposition rates than wild-type mice. Further, MSCs from Igf1rflox/flox mice with Igf1r deleted by a Cre adenovirus in vitro, although recruited to the bone surface after implantation, were unable to differentiate into osteoblasts. We also found that the concentrations of IGF-1 in the bone matrix and marrow of aged rats were lower than in those of young rats and directly correlated with the age-related decrease in bone mass. Likewise, in age-related osteoporosis in humans, we found that bone marrow IGF-1 concentrations were 40% lower in individuals with osteoporosis than in individuals without osteoporosis. Notably, injection of IGF-1 plus IGF binding protein 3 (IGFBP3), but not injection of IGF-1 alone, increased the concentration of IGF-1 in the bone matrix and stimulated new bone formation in aged rats. Together, these results provide mechanistic insight into how IGF-1 maintains adult bone mass, while also providing a further rationale for its therapeutic targeting to treat age-related osteoporosis.