Activated protein C (APC) is a cytoprotective anticoagulant that stimulates cellular proliferation, suppresses inflammation, and enhances wound healing. These properties of APC are primarily modulated through its receptors, endothelial protein C receptor (EPCR) and protease-activated receptors (PAR)1/2, and subsequent activation of downstream proteins including ERK1/2, Akt, and p38. In this study, APC was investigated for its potential application in bone repair and arthritic bone conditions, including rheumatoid arthritis (RA) and osteoarthritis (OA), through its actions on osteoblasts. APC increased viability of MG-63 and MC3T3-E1 cells through a PAR1 dependent pathway and subsequently upregulated pERK, pAkt, and p-p38. APC augmented bone and tissue volume but not osteoclast numbers in a BMP-2 induced murine ectopic bone formation model. APC, however, did not enhance callus formation in a closed murine mid-tibial fracture model owing to several study limitations. In contrast with its effects in osteoblastic cell lines, APC suppressed cell viability through an EPCR/PAR1/PAR2 dependent mechanism in OA and RA bone derived cells. APC also decreased pERK, increased p27, and modulated IL-6 and MMP-2 secretion in arthritic cells. Collectively, these results demonstrate the diverse actions of APC in normal and arthritic bone biology including the novel potential of APC on bone formation.