Osteoblasts and adipocytes differentiate from a common pluripotent precursor, the mesenchymal stem cell (MSC). Studies have identified numerous transcription factors, and multiple extracellular and intracellular signaling pathways that regulate the closely linked processes of adipogenesis and osteoblastogenesis. Interestingly, inducers of differentiation along one lineage often inhibit differentiation along the other; for example, the transcription factor peroxisome proliferator-activated receptor gamma (PPARgamma) is a prime inducer of adipogenesis that inhibits osteoblastogenesis. The latest research has shown that inducers of osteoblastogenesis (such as bone morphogenetic protein 2 and Wnt ligands) use different mechanisms to suppress the transactivation function of PPARgamma during osteoblastogenesis from MSCs. Signaling via the canonical Wnt-beta-catenin pathway inhibits PPARgamma mRNA expression, whereas signaling via the noncanonical Wnt pathway results in activation of a histone methyltransferase SETDB1 that represses PPARgamma transactivation through histone H3K9 methylation of target genes. This article summarizes Wnt and PPARgamma signaling in MSCs and the crosstalk between these pathways, and speculates on future clinical application of this knowledge as the basis of novel approaches for regeneration therapy.