Transient receptor potential vanilloid type 1 (TRPV1) is highly expressed on sensory neurons where it serves as a polymodal receptor for detecting physical and chemical stimuli. However, the role of TRPV1 in bone metabolism remains largely unclear. This study aimed to investigate the underlying mechanism of neuronal TRPV1 in regulating bone defect repair. In vivo experiment verified that TRPV1 activation could trigger dorsal root ganglion (DRG) producing the neuropeptide calcitonin gene-related peptide (CGRP) in mice. The accelerated bone healing of femoral defect in this process was observed compared to the control group (p < 0.05). Conversely, Trpv1 knockdown led to the reduced CGRP expression in DRG and nerves innervating femur bone tissue, following impaired bone formation and osteogenic capability in the defect region (p < 0.05), which could be rescued by local CGRP treatment. In vitro, results revealed that TRPV1 function in DRG neurons contributed essentially to the regulation of osteoblast physiology through affecting the production and secretion of CGRP. The capsaicin-activated neuronal TRPV1-CGRP axis could enhance the proliferation, migration and differentiation of osteoblasts (p < 0.05). Furthermore, we found that the promoting role of neuronal TRPV1 in osteogenesis were associated with Hippo signaling pathway, reflected by the phosphorylation protein level of large tumor suppressor 1 (LATS1), MOB kinase activator 1 (MOB1) and Yes-associated protein (YAP), as well as the subcellular location of YAP. Our study clarified the effects and intrinsic mechanisms of neuronal TRPV1 on bone defect repair, which might offer us a therapeutic implication for bone disorders.