Muscles of sarcopenic people show hypotrophic myofibers and infiltration with adipose and, at later stages, fibrotic tissue. The origin of infiltrating adipocytes resides in fibro-adipogenic precursors and nonmyogenic mesenchymal progenitor cells, and in satellite cells, the adult stem cells of skeletal muscles. Myoblasts and brown adipocytes share a common Myf5 progenitor cell: the cell fate depends on levels of bone morphogenetic protein 7 (BMP-7), a TGF-β family member. S100B, a Ca-binding protein of the EF-hand type, is expressed at relatively high levels in myoblasts from sarcopenic humans and exerts anti-myogenic effects via NF-κB-dependent inhibition of MyoD, a myogenic transcription factor acting upstream of the essential myogenic factor, myogenin. Adipogenesis requires high levels of ROS, and myoblasts of sarcopenic subjects show elevated ROS levels. Here we show that: (1) ROS overproduction in myoblasts results in upregulation of S100B levels via NF-κB activation; and (2) ROS/NF-κB-induced accumulation of S100B causes myoblast transition into brown adipocytes. S100B activates an NF-κB/Ying Yang 1 axis that negatively regulates the promyogenic and anti-adipogenic miR-133 with resultant accumulation of the brown adipogenic transcription regulator, PRDM-16. S100B also upregulates BMP-7 via NF-κB/Ying Yang 1 with resultant BMP-7 autocrine activity. Interestingly, myoblasts from sarcopenic humans show features of brown adipocytes. We also show that S100B levels and NF-κB activity are elevated in brown adipocytes obtained by culturing myoblasts in adipocyte differentiation medium and that S100B knockdown or NF-κB inhibition in myoblast-derived brown adipocytes reconverts them into fusion-competent myoblasts. At last, interstitial cells and, unexpectedly, a subpopulation of myofibers in muscles of geriatric but not young mice co-express S100B and the brown adipocyte marker, uncoupling protein-1. These results suggest that S100B is an important intracellular molecular signal regulating Myf5 progenitor cell differentiation into fusion-competent myoblasts or brown adipocytes depending on its levels.