In many skeletal diseases, including osteoporosis and disuse osteopenia, defective osteoblast differentiation is associated with increased marrow adipogenesis. The relative activity of two transcription factors, RUNX2 and PPAR!, controls whether a mesenchymal cell will differentiate into an osteoblast or adipocyte. Herein we show that the ERK/MAP kinase pathway, an important mediator of mechanical and hormonal signals in bone, stimulates osteoblastogenesis and inhibits adipogenesis via phosphorylation of RUNX2 and PPAR!. Induction of osteoblastogenesis in ST2 mesenchymal cells was associated with increased MAPK activity and RUNX2 phosphorylation. Under these conditions PPAR! phosphorylation also increased, but adipogenesis was inhibited. In contrast, during adipogenesis MAPK activity and phosphorylation of both transcription factors was reduced. RUNX2 phosphorylation and transcriptional activity were directly stimulated by MAPK, a response requiring phosphorylation at S301 and S319. MAPK also inhibited PPAR!-dependent transcription via S112 phosphorylation. Stimulation of MAPK increased osteoblastogenesis and inhibited adipogenesis, while dominant-negative suppression of activity had the opposite effect. In rescue experiments using Runx2-/- mouse embryo fibroblasts (MEFs), wild type or, to a greater extent, phosphomimetic mutant RUNX2 (S301E,S319E) stimulated osteoblastogenesis while suppressing adipogenesis. In contrast, a phosphorylation-deficient RUNX2 mutant (S301A,S319A) had reduced activity. Conversely, wild type or, to a greater extent, phosphorylation-resistant S112A mutant PPAR! strongly stimulated adipogenesis and inhibited osteoblastogenesis in Pparg -/- MEFs, while S112E mutant PPAR! was less active. Competition between RUNX2 and PPAR! was also observed at the transcriptional level. Together, these studies highlight the importance of MAP kinase signaling and RUNX2/PPAR! phosphorylation in the control of osteoblast and adipocyte lineages.