Icariin, the major ingredient of Herba Epimedii, promotes the osteogenic differentiation of rat bone marrow stromal cells (rBMSCs) and exerts protective effects against bone loss and increases bone regeneration, but the underlying signaling pathway by which icariin affects osteogenic differentiation remain unclear. Transcriptional coactivator with PDZ-binding motif (TAZ) is a transcriptional modulator of the Hippo signaling pathway, which plays an important role in the osteogenic differentiation of BMSCs by activating Runx2 gene during the terminal osteogenic differentiation. In this study, we found that 0.1μM icariin markedly promoted the proliferation, calcium depositions, and osteogenic genes expression of rBMSCs. Icariin (0.1μM) upregulated TAZ, Runx2, β-catenin, Osteopotin, and Dlx5 expression mainly at the early stage of osteogenic differentiation, and increased osteocalcin expression at the late stage. Our result further demonstrated that knockdown TAZ expression by lentivirus-mediated TAZ shRNA inhibited the icariin-induced osteogenic differentiation. Moreover, ICI 182780 (the estrogen receptor alpha inhibitor) or DKK1 (the Wnt/β-catenin pathway inhibitor), inhibited the icariin-induced increase in TAZ expression. Furthermore, icariin stimulated the activation of TAZ as evidenced by increased total TAZ protein and nuclear translocation, but these effects of icariin were blocked by ICI 182780 or DKK1. Taken together, our results demonstrate that icariin promotes the osteogenic differentiation of rBMSCs by increasing TAZ expression, and that the increased TAZ expression induced by icariin is mostly mediated by the ERα and Wnt/β-catenin pathway.