Abstract: Peptides from Pilose antler aqueous extract (PAAE) have been shown to stimulate the proliferation and differentiation of bone marrow mesenchymal stem cells (BMSCs). However, the underlying molecular mechanisms are not well understood. Here, PAAE was isolated and purified to explore the molecular mechanisms underlying PAAE's effects on BMSCs as well as its osteoprotective effects in ovariectomized rats. Our re s ults showed that PAAE promoted proliferation and differentiation of BMSCs to become osteoblasts by enhancing ALP activity and increasing extracellular matrix mineralization. The trabecular microarchitecture of ovariectomized rats was also found to be protected by PAAE. Quantitative reverse transcription-polymerase chain reaction (Quantitative RT-PCR) results suggest that PAAE also increased the expression of osteogenic markers including, alkaline phosphatase (ALP), runt-related transcription factor 2 (Runx2), osteocalcin (OCN), bone morphogenetic protein-2 (BMP-2), and collagen I (COL-I). Immunoblotting results indicated that PAAE upregulated the levels of BMP-2 and Runx2 and was associated with Smad1/5 phosphorylation. PAAE A at the concentration of 200 µg·mL^-1 showed the strongest effect on proliferation and osteogenic differentiation of BMSCs after 48 h. Using matrix-assisted laser desorption/ionization time of flight mass spectrometry (MALDI-TOF MS), we identified the molecular weight of PAAE A and found that it is less than 3000 Da and showed several significant peaks. In conclusion, PAAE activates the BMP-2/Smad1, 5/Runx2 pathway to induce osteoblastic differentiation and mineralization in BMSCs and can inhibit OVX-induced bone loss. These mechanisms are likely responsible for its therapeutic effect on postmenopausal osteoporosis.