Leptin signaling is required for normal bone homeostasis; however, loss of leptin results in differing effects on cortical and cancellous bone, as well as altered responses between the axial and appendicular regions. Local β‐adrenergic actions are responsible for the greater cancellous bone volume in leptin‐deficient (ob/ob) mice; however, the mechanism responsible for the opposing reduction in cortical bone in ob/ob mice is not known. Here we show that blocking the leptin‐deficient increase in neuropeptide Y (NPY) expression reverses the cortical bone loss in ob/ob mice. Mice null for both NPY and leptin (NPY^–/–ob/ob), display greater cortical bone mass in both long‐bones and vertebra, with NPY^–/–ob/ob mice exhibiting thicker and denser cortical bone, associated with greater endocortical and periosteal mineral apposition rate (MAR), compared to ob/ob animals. Importantly, these cortical changes occurred without significant increases in body weight, with NPY^–/–ob/ob mice showing significantly reduced adiposity compared to ob/ob controls, most likely due to the reduced respiratory exchange ratio seen in these animals. Interestingly, cancellous bone volume was not different between NPY^–/–ob/ob and ob/ob, suggesting that NPY is not influencing the adrenergic axis. Taken together, this work demonstrates the critical role of NPY signaling in the regulation of bone and energy homeostasis, and more importantly, suggests that reduced leptin levels or leptin resistance, which occurs in obesity, could potentially inhibit cortical bone formation via increased central NPY signaling. © 2013 American Society for Bone and Mineral Research.