Osteoblasts and adipocytes are derived from common mesenchymal progenitor cells. The bone loss of osteoporosis is associated with altered progenitor differentiation from an osteoblastic to an adipocytic lineage. cDNA microarrays and quantitative real-time PCR (Q-PCR) were carried out in a differentiating mouse stromal osteoblastic cell line, Kusa 4b10, to identify gene targets of factors that stimulate osteoblast differentiation including parathyroid hormone (PTH) and gp130-binding cytokines, oncostatin M (OSM) and cardiotrophin-1 (CT-1). Zinc finger protein 467 (Zfp467) was rapidly downregulated by PTH, OSM, and CT-1. Retroviral overexpression and RNA interference for Zfp467 in mouse stromal cells showed that this factor stimulated adipocyte formation and inhibited osteoblast commitment compared with controls. Regulation of adipocyte markers, including peroxisome proliferator-activated receptor (PPAR) ␥, C/EBP␣, adiponectin, and resistin, and late osteoblast/osteocyte markers (osteocalcin and sclerostin) by Zfp467 was confirmed by Q-PCR. Intra-tibial injection of calvarial cells transduced with retroviral Zfp467 doubled the number of marrow adipocytes in C57Bl/6 mice compared with vector control-transduced cells, providing in vivo confirmation of a pro-adipogenic role of Zfp467. Furthermore, Zfp467 transactivated a PPAR-response element reporter construct and recruited a histone deacetylase complex. Thus Zfp467 is a novel co-factor that promotes adipocyte differentiation and suppresses osteoblast differentiation. This has relevance to therapeutic interventions in osteoporosis, including PTH-based therapies currently available, and may be of relevance for the use of adipose-derived stem cells for tissue engineering.Osteoblasts and adipocytes are derived from a common subpopulation of mesenchymal stem cell (MSC) 4 progenitors.MSC lineage commitment is dependent on the expression of key transcription factors that, on induction, initiate a cascade of events culminating in cellular differentiation and development. Among the transcription factors regulated, osteoblast differentiation requires expression of Runx2 (1, 2) to commit progenitors to preosteoblasts, with Osterix (3), ATF4 (4), and AP-1 (5) promoting their transition to functional osteoblasts. Alternately, adipocytic differentiation requires expression of different key regulators, peroxisome proliferator-activated receptor ␥ (PPAR␥) (6) and members of the CCAAT/enhancer-binding protein family (C/EBPs) (7). Because osteoblasts and adipocytes are derived from common progenitors, lineage determination of precursor cells to osteoblasts results in a proportional decrease in adipogenesis. This inverse relationship is observed clinically; an increase in marrow adiposity is associated with age-related osteoporosis (8) and conditions that induce bone loss, such as ovariectomy (9) and immobilization (10). Conversely, high bone mass due to increased osteoblast commitment is associated with reduced adipocyte differentiation (5). The molecular mechanisms by which lineage...