Multiple myeloma is the most common form of plasma cell dyscrasia and virtually all cases of myeloma exhibit osteolytic lesions, which result in bone pain, pathological fractures, spinal cord compression, and hypercalcaemia. Malignant plasma cells disrupt the delicate balance between bone formation and bone resorption, which ultimately leads to the debilitating osteolytic lesions. This review focuses principally on mechanisms of osteoblast inhibition by malignant plasma cells with emphasis placed on our experimental findings, which support a model for abnormal Wnt signaling in osteoblast suppression. We describe how excessive amounts of soluble Wnt inhibitors secreted by malignant plasma cells in multiple myeloma could promote osteolytic lesions, tumor growth, suppress hematopoiesis, prevent proper engraftment, and expansion of transplanted stem cells. Finally, we detail current therapies shown to disrupt the interaction between the myeloma cell and the microenvironment, leading to activation of osteoblasts.