Diosgenin, a steroid saponin extracted from the root of wild yam ( Dioscorea villossa) is claimed to have osteogenic property. However, detailed studies providing evidence to this claim have not been fully undertaken. In this study, we investigated the effect of diosgenin on the osteogenesis of murine MC3T3-E1 osteoblastic cells. Cells were cultured with varying levels of diosgenin (0–10 μM) within 25 days of bone formation period. Diosgenin was found to stimulate proliferation within the range of 0.01–5 μM using MTT assay. The medium and cellular levels of Type 1 collagen and alkaline phosphatase (ALP), both of which are major bone matrix proteins, increased within the low range of diosgenin concentration (>0–3 μM), and this pattern was further confirmed by collagen and ALP staining of the extracellular matrix (ECM). The cellular protein expression of ALP and collagen Type 1 was also increased at 0.1–1 μM diosgenin treatment as analyzed by Western blot. Calcium deposition within the ECM also showed the same pattern as assessed by Alizarin Red S and Von Kossa staining. Bone-specific transcription factor runt-related transcription factor 2 (Runx2) and Runx2-regulated osteopontin protein expressions were induced at low concentration (0.1–1 μM) and again decreased with high diosgenin concentrations. Based on our findings, our study suggests that diosgenin can enhance bone formation by stimulating the synthesis and secretion of Type 1 collagen and ALP and bone marker proteins Runx2 and osteopontin expression. The increased levels of these marker proteins, in turn, can increase the formation of calcium deposits within the ECM thereby increasing bone formation.