Canonical Wnt signaling is clearly required for skeletal development and bone formation. However, the targets of Wnt signaling that convert this signal into bone are unclear. Identification of these targets will yield insight into normal bone physiology and suggest new therapeutics for treatment of bone disease. Here we show that an essential regulator of bone development, FGF18, is a direct target of canonical Wnt signaling. A single DNA binding site for the Wnt-dependent transcription factors TCF/Lef accounted for the stimulation of the fgf18 promoter in response to Wnt signaling. Additionally, targeted disruption of betacat blocked fgf18 expression in vivo. Partially overlapping the TCF/Lef binding site is a Runx2 binding site and experiments showed that Runx2 and TCF/Lef work cooperatively to induce fgf18 expression. RNA interference knockdown of Runx2 inhibited and Runx2 forced expression augmented the induction of fgf18 by canonical Wnt signaling. Significantly, Runx2 formed a complex with Lef1 or TCF4 and this complex bound the composite binding site in the fgf18 promoter. These results demonstrate that two transcription pathways that are essential for bone, physically and functionally converge at the fgf18 promoter.