Runx2, osterix, and β-catenin are essential for osteoblast differentiation. Runx2 directs multipotent mesenchymal cells to an osteoblastic lineage, and inhibits them from differentiating into the adipocytic and chondrocytic lineages. After differentiating to preosteoblasts, β-catenin, osterix, and Runx2 direct them to immature osteoblasts, which produce bone matrix proteins, blocking their potential to differentiate into the chondrocytic lineage. Runx2 inhibits osteoblast maturation and the transition into osteocytes, keeping osteoblasts in an immature stage. Other transcription factors including Msx1, Msx2, Dlx5, Dlx6, Twist, AP1(Fos/Jun), Knox-20, Sp3, and ATF4 are also involved in osteoblast differentiation. To gain an understanding of bone development, it is important to position these transcription factors to the right places in the processes of osteoblast differentiation. J. Cell. Biochem. 99: 1233–1239, 2006. © 2006 Wiley-Liss, Inc.