IGF-I acts through endocrine and local, autocrine/paracrine routes. Disruption of both endocrine and local IGF-I action leads to neonatal lethality and impaired growth in various tissues including bone; however, the severity of growth and skeletal phenotype caused by disruption of endocrine IGF-I action is far less than with total IGF-I disruption. Based on these data and the fact that bone cells express IGF-I in high abundance, we and others predicted that locally produced IGF-I is also critical in regulating growth and bone accretion. To determine the role of local IGF-I, type 1α2 collagen-Cre mice were crossed with IGF-I loxP mice to generate Cre+ (conditional mutant) and Cre− (control) loxP homozygous mice. Surprisingly, approximately 40–50% of the conditional mutants died at birth, which is similar to total IGF-I disruption, but not observed in mice lacking circulating IGF-I. Expression of IGF-I in bone and muscle but not liver and brain was significantly decreased in the conditional mutant. Accordingly, circulating levels of serum IGF-I were also not affected. Disruption of local IGF-I dramatically reduced body weight 28–37%, femur areal bone mineral density 10–25%, and femur bone size 18–24% in growing mice. In addition, mineralization was reduced as early as during embryonic development. Consistently, histomorphometric analysis determined impaired osteoblast function as demonstrated by reduced mineral apposition rate (14–30%) and bone formation rate (35–57%). In conclusion, both local and endocrine IGF-I actions are involved in regulating growth of various tissues including bone, but they act via different mechanisms.