Bone metastasis is the leading cause of tumor-related deaths in patients with prostate cancer (PCa). The interactions between PCa and the bone microenvironment form a vicious cycle. However, the complex molecular mechanism by which PCa regulates the bone microenvironment remains unclear. To determine the role of glucose-regulated protein (GRP78) in bone metastasis and growth, we established intracardiac injection and tibial injection models, and performed their histological staining. To assess the effect of GRP78 on the differentiation of osteoblasts and osteoclasts, we performed cell co-culture, enzyme-linked immunosorbent assay, alizarin red staining, and tartrate-resistant acid phosphatase staining. We found that GRP78 is upregulated in PCa tissues and that its upregulation is associated with PCa progression in patients. Functional experiments showed that GRP78 overexpression in PCa cells considerably promotes bone metastasis and induces bone microstructure changes. Silencing GRP78 substantially inhibits the migration and invasion of PCa cells in vitro and bone metastasis and tumor growth in vivo. Mechanistically, GRP78 promotes the migration and invasion of PCa cells via the Sonic hedgehog (Shh) signaling pathway. Cell co-culture showed that GRP78 promotes the differentiation of osteoblasts and osteoclasts through Shh signaling. Our findings suggest that tumor-bone matrix interactions owing to GRP78-activated paracrine Shh signaling by PCa cells regulate the differentiation of osteoblasts and osteoclasts. This process promotes bone metastasis and the proliferation of PCa cells in the bone microenvironment. Targeting the GRP78/Shh axis can serve as a therapeutic strategy to prevent bone metastasis and improve the quality of life of patients with PCa.