Based on the fact that aging is associated with a reciprocal decrease of osteogenesis and an increase of adipogenesis in bone marrow and that osteoblasts and adipocytes share a common progenitor, this study investigated the role of PPARγ γ, a key regulator of adipocyte differentiation, in bone metabolism. Homozygous PPARγ γ-deficient ES cells failed to differentiate into adipocytes, but spontaneously differentiated into osteoblasts, and these were restored by reintroduction of the PPARγ γ gene. Heterozygous PPARγ γ-deficient mice exhibited high bone mass with increased osteoblastogenesis, but normal osteoblast and osteoclast functions, and this effect was not mediated by insulin or leptin. The osteogenic effect of PPARγ γ haploinsufficiency became prominent with aging but was not changed upon ovariectomy. The PPARγ γ haploinsufficiency was confirmed to enhance osteoblastogenesis in the bone marrow cell culture but did not affect the cultures of differentiated osteoblasts or osteoclast-lineage cells. This study demonstrates a PPARγ γ-dependent regulation of bone metabolism in vivo, in that PPARγ γ insufficiency increases bone mass by stimulating osteoblastogenesis from bone marrow progenitors.Nonstandard abbreviations used: alkaline phosphatase (ALP); bone morphogenetic protein-2 (BMP-2); bone volume (BV); CCAAT enhancer-binding proteins (C/EBPs); computed tomography (CT); LDL receptor-related protein 5 (LRP5); leukemia inhibitory factor (LIF); M-CSF-dependent bone marrow macrophage (M-BMMφ); receptor activator of nuclear factor κB ligand (RANKL); ovariectomy (OVX); PPAR responsive element (PPRE); tartrate-resistant acid phosphatase (TRAP); tissue volume (TV); type I collagen α1 chain (COL1A1).