Osteoporotic fractures cause major morbidity and mortality in the aging population. Genome‐wide association studies (GWAS) have identified USF3 as the novel susceptibility gene of osteoporosis. However, the functional role in bone metabolism and the target gene of the basic helix‐loop‐helix transcription factor USF3 are unclear. Here, we show that USF3 enhances osteoblast differentiation and suppresses osteoclastogenesis in cultured human osteoblast‐like U‐2OS cells. Mechanistic studies revealed that transcription factor USF3 antagonistically interacts with anti‐osteogenic TWIST1/TCF12 heterodimer in the WNT16 and RUNX2 promoter, and counteracts CREB1 and JUN/FOS in the RANKL promoter. Importantly, the osteoporosis GWAS variant g.1744A>G (rs2908007A>G) located in the WNT16 promoter confers G‐allele‐specific transcriptional modulation by USF3, TWIST1/TCF12 and TBX5/TBX15, and USF3 transactivates the osteoclastogenesis suppressor WNT16 promoter activity and antagonizes the repression of WNT16 by TWIST1 and TCF12. The risk G allele of osteoporosis GWAS variant g.3260A>G (rs4531631A>G) in the RANKL promoter facilitates the binding of CREB1 and JUN/FOS and enhances transactivation of the osteoclastogenesis contributor RANKL that is inhibited by USF3. Our findings uncovered the functional mechanisms of osteoporosis novel GWAS‐associated gene USF3 and lead single nucleotide polymorphisms rs2908007 and rs4531631 in the regulation of bone formation and resorption.