In bone marrow, osteoblasts and adipocytes are differentiated from mesenchymal progenitor cells and their differentiation is reciprocally regulated by largely unknown mechanisms. In this study, we investigated downstream signaling cascades of adiponectin, a member of the adipocytokine family, in the regulation of osteoblast differentiation. Adiponectin augmented expression of several osteogenic marker genes and increased osteoblast differentiation in mesenchymal progenitor cells. The expression of cyclooxygenase-2 (COX2) was potently increased by adiponectin, whereas inhibition of COX2 activity abolished the effect of adiponectin on osteogenesis. In addition, adiponectin rapidly stimulated p38 mitogen-activated protein kinase via the adiponectin receptor, AdipoR1, which resulted in c-Jun activation for COX2 expression. Adiponectin also stimulated BMP2 expression in a COX2-dependent manner. Moreover, Runx2, a key osteogenic transcription factor, contributed to the acceleration of osteogenesis in the presence of adiponectin. Collectively, the finding that adiponectin could promote osteogenesis through an intracellular signaling cascade in mesenchymal progenitor cells suggests that adiponectin would be a potential therapeutic target for bone-related diseases.