Bone marrow mesenchymal stem cells (MSCs) reside in a hypoxic niche that maintains their differentiation potential. Several studies have highlighted the critical role of hypoxia (low oxygen concentration) in the regulation of stem cell function, reporting differentiation defects following a switch to normoxia (high oxygen concentration). However, the molecular events triggering changes in stem cell fate decisions in response to high oxygen remain elusive. Here, we study the impact of normoxia in the mito-nuclear communication, with regards to stem cell differentiation. We show that normoxia-cultured MSCs undergo profound transcriptional alterations which cause irreversible osteogenesis defects. Mechanistically, high oxygen promotes chromatin compaction and histone hypo-acetylation, particularly on promoters and enhancers of osteogenic genes. Although normoxia induces rewiring of metabolism, resulting in high acetyl-CoA levels, histone hypo-acetylation occurs due to trapping of acetyl-CoA inside mitochondria, likely due to lower CiC activity. Strikingly, restoring the cytosolic acetyl-CoA pool via acetate supplementation remodels the chromatin landscape and rescues the osteogenic defects. Collectively, our results demonstrate that the metabolism-chromatin-osteogenesis axis is heavily perturbed in response to high oxygen and identify CiC as a novel, oxygen-sensitive regulator of MSC function.