Knowledge of the basic mechanisms controlling osteogenesis and adipogenesis might provide new insights into the prevention of osteoporosis and age-related osteopenia. With the help of magnetic cell sorting and fluorescence activated cell sorting (FACS), osteoblastic subpopulations of mesenchymal progenitor cells were characterized. Alkaline phosphatase (AP) negative cells expressed low levels of osteoblastic and adipocytic markers. AP positive cells expressed adipocytic markers more strongly than the AP negative cell populations, thus suggesting that committed osteoblasts exhibit a greater adipogenic potential. AP negative cells differentiated to the mature osteoblastic phenotype, as demonstrated by increased AP-activity and osteocalcin secretion under standard osteogenic culture conditions. Surprisingly, this was accompanied by increased expression of adipocytic gene markers such as peroxisome proliferator-activated receptor-gamma2, lipoprotein lipase and fatty acid binding protein. The induction of adipogenic markers was suppressed by transforming growth factor-beta1 (TGF-beta1) and promoted by bone morphogenetic protein 2 (BMP-2). Osteogenic culture conditions including BMP-2 induced both the formation of mineralized nodules and cytoplasmic lipid vacuoles. Upon immunogold electron microscopic analysis, osteoblastic and adipogenic marker proteins were detectable in the same cell. Our results suggest that osteogenic and adipogenic differentiation in human mesenchymal progenitor cells might not be exclusively reciprocal, but rather, a parallel event until late during osteoblast development.