A novel nonsteroidal androgen receptor (AR) binder, S-40503, was successfully generated in order to develop selective androgen receptor modulators (SARMs). We evaluated the binding specificity for nuclear receptors (NRs) and osteoanabolic activities of S-40503 in comparison with a natural nonaromatizable steroid, 5α-dihydrotestosterone (DHT). The compound preferentially bound to AR with nanomolar affinity among NRs. When S-40503 was administrated into orchiectomized (ORX) rats for 4 weeks, bone mineral density (BMD) of femur and muscle weight of levator ani were increased as markedly as DHT, but prostate weight was not elevated over the normal at any doses tested. In contrast, DHT administration caused about 1.5-fold increase in prostate weight. The reduced virilizing activity was clearly evident from the result that 4-week treatment of normal rats with S-40503 showed no enlargement of prostate. To confirm the bone anabolic effect, S-40503 was given to ovariectomized (OVX) rats for 2 months. The compound significantly increased the BMD and biomechanical strength of femoral cortical bone, whereas estrogen, anti-bone resorptive hormone, did not. The increase in periosteal mineral apposition rate (MAR) of the femur revealed direct bone formation activity of S-40503. It was unlikely that the osteoanabolic effect of the compound was attribute to the enhancement of muscle mass, because immobilized ORX rats treated with S-40503 showed a marked increase in BMD of tibial cortical bone without any actions on the surrounding muscle tissue. Collectively, our novel compound served as a prototype for SARMs, which had unique tissue selectivity with high potency for bone formation and lower impact upon sex accessory tissues.