The glycoprotein sclerostin has been identified as a negative regulator of bone growth. It exerts its function by interacting with the Wnt co-receptor LRP5/6, blocks the binding of Wnt factors and thereby inhibits Wnt signalling. Neutralizing anti-sclerostin antibodies are able to restore Wnt activity and enhance bone growth thereby presenting a new osteoanabolic therapy approach for diseases such as osteoporosis. We have generated various Fab antibodies against human and murine sclerostin using a phage display set-up. Biochemical analyses have identified one Fab developed against murine sclerostin, AbD09097 that efficiently neutralizes sclerostin's Wnt inhibitory activity. In vitro interaction analysis using sclerostin variants revealed that this neutralizing Fab binds to sclerostin's flexible second loop, which has been shown to harbour the LRP5/6 binding motif. Affinity maturation was then applied to AbD09097, providing a set of improved neutralizing Fab antibodies which particularly bind human sclerostin with enhanced affinity. Determining the crystal structure of AbD09097 provides first insights into how this antibody might recognize and neutralize sclerostin. Together with the structure–function relationship derived from affinity maturation these new data will foster the rational design of new and highly efficient anti-sclerostin antibodies for the therapy of bone loss diseases such as osteoporosis.