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 down-regulated 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)γ, C/EBPα, 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.