Parathyroid hormone–related protein (PTHrP) and parathyroid hormone (PTH) have N‐terminal domains that bind a common receptor, PTHR1. N‐terminal PTH (teriparatide) and now a modified N‐terminal PTHrP (abaloparatide) are US Food and Drug Administration (FDA)‐approved therapies for osteoporosis. In physiology, PTHrP does not normally circulate at significant levels, but acts locally, and osteocytes, cells residing within the bone matrix, express both PTHrP and the PTHR1. Because PTHR1 in osteocytes is required for normal bone resorption, we determined how osteocyte‐derived PTHrP influences the skeleton. We observed that adult mice with low PTHrP in osteocytes (targeted with the Dmp1(10kb)‐Cre) have low trabecular bone volume and osteoblast numbers, but osteoclast numbers were unaffected. In addition, bone size was normal, but cortical bone strength was impaired. Osteocyte‐derived PTHrP therefore stimulates bone formation and bone matrix strength, but is not required for normal osteoclastogenesis. PTHrP knockdown and overexpression studies in cultured osteocytes indicate that osteocyte‐secreted PTHrP regulates their expression of genes involved in matrix mineralization. We determined that osteocytes secrete full‐length PTHrP with no evidence for secretion of lower molecular weight forms containing the N‐terminus. We conclude that osteocyte‐derived full‐length PTHrP acts through both PTHR1 receptor‐mediated and receptor‐independent actions in a paracrine/autocrine manner to stimulate bone formation and to modify adult cortical bone strength. © 2017 American Society for Bone and Mineral Research.