Icariin (ICA) is a major active ingredient in Herba epimedii, which is commonly used as a Chinese herbal medicine for the treatment of osteoporosis. Previous studies have revealed that ICA exerted a protective effect against bone loss and increased bone regeneration; however, the association between ICA and estrogen receptor (ER) signaling remains unclear. The aim of the present study was to determine the effect of ICA on rat bone marrow stromal cells (rBMSCs). Cell Counting Kit‑8 assays were conducted to measure proliferation, alkaline phosphatase (ALP) activity was evaluated to assess osteoblast differentiation, and reverse transcription‑quantitative polymerase chain reaction as well as western blotting were performed to detect the expression of cellular and molecular markers of osteogenic or adipogenic differentiation. The results demonstrated that treatment of rBMSCs with 10‑6 M ICA stimulated rBMSC proliferation and ALP activity. Furthermore, ICA treatment increased the expression of the osteogenic markers runt‑related transcription factor 2, collagen type 1 and bone morphogenetic Protein 2; however, it also decreased the expression of the adipogenic differentiation markers peroxisome proliferator‑activated receptor gamma and CCAAT/enhancer‑binding protein α. Treatment of rBMSCs with ICI182780, an ER antagonist, blocked the effects of ICA. Taken together, these findings indicated that ICA may stimulate osteoblast differentiation and inhibit adipogenic differentiation via the activation of the ER signaling pathway. Therefore, ICA has the potential to serve as a therapeutic alternative for the prevention and treatment of osteoporosis.