The integrin receptor family plays important roles in cell-to-cell and cell-to-extracellular matrix interactions through the recruitment of accessory molecules. One of them, the integrin cytoplasmic domain-associated protein-1 (ICAP-1; also known as ITGB1BP1), specifically interacts with the cytoplasmic domain of the beta1 integrin subunit and negatively regulates its function in vitro. To address the role of ICAP-1 in vivo, we ablated the Icap-1 gene in mice. We report an unexpected role of ICAP-1 in osteoblast function during bone development. Icap-1-deficient mice suffer from reduced osteoblast proliferation and delayed bone mineralization, resulting in the retarded formation of bone sutures. In vitro studies reveal that primary and immortalized Icap-1-null osteoblasts display enhanced adhesion and spreading on extracellular matrix substrates, probably owing to an increase in beta1 integrin activation. Finally, we provide evidence that ICAP-1 promotes differentiation of osteoprogenitors by supporting their condensation through modulating the integrin high affinity state.