Background & Aims: Osteoporosis frequently occurs in Crohn's disease, often because of corticosteroids. Budesonide as controlled release capsules is a locally acting corticosteroid with low systemic bioavailability. We investigated its effects on bone compared with prednisolone. Methods: In 34 international centers, 272 patients with Crohn's disease involving ileum and/or colon ascendens were randomized to once daily treatment with budesonide or prednisolone for 2 years at doses adapted to disease activity. One hundred eighty-one corticosteroid-free patients had active disease (98 had never received corticosteroids, corticosteroid naive; 83 had received corticosteroids previously, corticosteroid exposed), and 90 had quiescent disease, receiving long-term low doses of corticosteroids, corticosteroid-dependent; in 1 patient, no efficacy data were obtained. Bone mineral density and fractures were assessed in a double-blinded fashion; disease activity, side effects, and quality of life were monitored. Results: Neither the corticosteroid-free nor the corticosteroid-dependent patients treated with budesonide differed significantly in bone mineral density from those receiving prednisolone. However, corticosteroid-naive patients receiving budesonide had smaller reductions in bone mineral density than those on prednisolone (mean, -1.04% vs -3.84%; P =. 0084). Treatment-emergent corticosteroid side effects were less frequent with budesonide. Efficacy was similar in both groups. Conclusions: Treatment with budesonide is associated with better preserved bone mass compared with prednisolone in only the corticosteroid-naive patients with active ileocecal Crohn's disease. In both the corticosteroid-free and corticosteroid-dependent groups, budesonide and prednisolone were equally effective for up to 2 years, but budesonide caused fewer corticosteroid side effects.