Sclerostin, a key regulator of Wnt/β-catenin signaling, exhibits dual therapeutic potential in bone disorders: its inhibition promotes bone formation in osteoporosis, while its mimicry suppresses aberrant bone growth in osteoarthritis (OA). Using structural insights from NMR studies, we identified two sclerostin-derived peptides: SC-1 (an 18-mer) from loop 2, and SC-3 (a 14-mer) from loop 3. Molecular modeling showed that SC-1 binds to the first ectodomain of LRP6, potentially displacing sclerostin through competitive inhibition to activate Wnt signaling. In contrast, SC-3 occupies the sclerostin/Wnt-binding site on the second ectodomain, thereby mimicking sclerostin's inhibitory function. In ovariectomized (OVX) rats, SC-1 (100 µg/kg) restored bone mineral density (BMD), trabecular architecture, and mechanical strength to sham levels, outperforming teriparatide by coupling bone formation with resorption suppression. In chronic kidney disease-induced osteoporosis, SC-1 reversed osteomalacia and improved renal parameters. Safety assessments showed that SC-1 lacked immunogenicity (no increase in CD11b+ cells) and cardiovascular risks (no hERG inhibition or aortic aneurysms in ApoE⁻/⁻ mice), distinguishing it from romosozumab, a clinically used anti-sclerostin antibody. For OA, SC-3 suppressed subchondral bone formation (via Runx2 and BMP-2 downregulation) and enhanced cartilage matrix synthesis (via Sox-9 and Col-II upregulation). In a rat OA model, weekly SC-3 intra-articular injections (50 µg/kg) for 8 weeks prevented OA progression and normalized bone volume. A single dose of SC-3 (50 µg/kg) delivered in a shear-thinning hydrogel matched multi-dose efficacy, addressing adherence challenges. This study identifies two distinct sclerostin-derived peptides: SC-1, a safe dual-action (anabolic and anti-catabolic) peptide for osteoporosis, and SC-3 for OA, with hydrogel-enabled sustained release enhancing its therapeutic potential.