Oxysterols form a large family of oxygenated derivatives of cholesterol that are present in circulation, and in human and animal tissues. The discovery of osteoinductive molecules that can induce the lineage-specific differentiation of cells into osteoblastic cells and therefore enhance bone formation is crucial for better management of bone fractures and osteoporosis. We previously reported that specific oxysterols have potent osteoinductive properties and induce the osteoblastic differentiation of pluripotent mesenchymal cells. In the present report we demonstrate that the induction of osteoblastic differentiation by oxysterols is mediated through a protein kinase C (PKC)- and protein kinase A (PKA)-dependent mechanism(s). Furthermore, oxysterol-induced-osteoblastic differentiation is marked by the prolonged DNA-binding activity of Runx2 in M2-10B4 bone marrow stromal cells (MSCs) and C3H10T1/2 embryonic fibroblastic cells. This increased activity of Runx2 is almost completely inhibited by PKC inhibitors Bisindolylmaleimide and Rottlerin, and only minimally inhibited by PKA inihibitor H-89. PKC- and PKA-dependent mechanisms appear to also regulate other markers of osteoblastic differentiation including alkaline phosphatase (ALP) activity and osteocalcin mRNA expression in response to oxysterols. Finally, osteogenic oxysterols induce osteoblastic differentiation with BMP7 and BMP14 in a synergistic manner as demonstrated by the enhanced Runx2 DNA-binding activity, ALP activity, and osteocalcin mRNA expression. Since Runx2 is an indispensable factor that regulates the differentiation of osteoblastic cells and bone formation in vitro and in vivo, its increased activity in oxysterol-treated cells further validates the potential role of oxysterols in lineage-specific differentiation of pluripotent mesenchymal cells and their potential therapeutic use as bone anabolic factors.