Ossifying fibroma (OF) is a rare benign tumor of the craniofacial bones that can reach considerable and disfiguring dimensions if left untreated. Although the clinicopathological characteristics of OF are well established, the underlying etiology has remained largely unknown. Our work indicates that Men1—a tumor suppressor gene responsible of Multiple endocrine neoplasia type 1—is critical for OF formation and shows that mice with targeted disruption of Men1 in osteoblasts (Men1Runx2Cre) develop multifocal OF in the mandible with a 100% penetrance. Using lineage-tracing analysis, we demonstrate that loss of Men1 arrests stromal osteoprogenitors in OF at the osterix-positive pre-osteoblastic differentiation stage. Analysis of Men1-lacking stromal spindle cells isolated from OF (OF-derived MSCs (OFMSCs)) revealed a downregulation of the cyclin-dependent kinase (CDK) inhibitor Cdkn1a, consistent with an increased proliferation rate. Intriguingly, the re-expression of Men1 in Men1-deficient OFMSCs restored Cdkn1a expression and abrogated cellular proliferation supporting the tumor-suppressive role of Men1 in OF. Although our work presents the first evidence of Men1 in OF development, it further provides the first genetic mouse model of OF that can be used to better understand the molecular pathogenesis of these benign tumors and to potentially develop novel treatment strategies.