In bone marrow, the differentiation of osteoblasts and adipocytes is reciprocally regulated. This inverse regulation occurs mainly through complex signaling crosstalk between transcriptional factors such as peroxisome proliferator-activated receptor-γ (PPARγ) and runt-related transcription factor 2 (Runx2). This commentary addresses the role of myeloid elf-1 like factor (MEF) and distal-less homeobox 5 (Dlx5) in the lineage commitment of bone marrow mesenchymal stem cells into adipocytes and osteoblasts, respectively. MEF suppresses osteoblastogenesis by preventing Runx2 from binding to the promoters of target genes and enhancing adipogenesis via transactivation of PPARγ expression. Conversely, Dlx5 enhances osteoblastogenesis through upregulation of the expression of Runx2 and osteoblast marker genes while suppressing adipogenesis through the downregulation of PPARγ expression by sequestering the cAMP response element binding protein and CCAAT/enhancer-binding protein α. Studies designed to examine the effects of physiological and pathologic signals on the expression of MEF and Dlx5 will provide further insight to the function of these transcription factors in vivo.