Sanguinarine, a benzophenanthridine alkaloid, has been previously demonstrated to exert antimicrobial, anti‐inflammatory and anti‐tumor activities. A previous study has identified Sanguinarine as a potential drug candidate for osteoporosis treatment by computational bioinformatics analysis. This study further evaluated the effects of Sanguinarine on the differentiation of murine preosteoblast MC3T3‐E1 cells and its anti‐osteoporosis activity in an ovarietomized rat model. Sanguinarine treatment (0.25, 0.5, 1 and 2 µM) of MC3T3‐E1 cells significantly increased alkaline phosphatase (ALP) activity and the phoshporalyation of AMP‐activated protein kinase α subunit (AMPKα), but did not affect cell proliferation. The induction effects of Sanguinarine treatment (2 µM) on ALP activity, AMPKα phosphorylation, Smad1 phosphorylation and the expression of three osteoblast differentiation‐regulators (bone morphogenetic protein 2 [BMP2], osterix [OSX] and osteoprotegerin [OPG]) were partially reversed by Compound C treatment. More importantly, Sanguinarine treatment promoted bone tissue growth in an ovariectomized (OVX) osteoporosis rat model as evaluated by histological examination, micro‐CT analysis and serum parameter detection. In conclusion, these results indicate that Sanguinarine induces the differentiation of MC3T3‐E1 cells through the activation of the AMPK/Smad1 signaling pathway. Sanguinarine can stimulate bone growth in vivo and may be an effective drug for osteoporosis treatment. This article is protected by copyright. All rights reserved