In osteoporosis, the bone marrow stroma osteogenic cell population declines and adipocyte numbers increase. We recently showed that oxidized lipids inhibit differentiation of preosteoblasts. In this report, we assess the effect of minimally oxidized low density lipoprotein (MM-LDL) on osteoblastic differentiation of murine marrow stromal cells, M2–10B4. MM-LDL, but not native LDL, inhibited stromal cell osteoblastic differentiation as demonstrated by inhibition of alkaline phosphatase activity, collagen I processing, and mineralization, through a mitogen-activated protein kinase–dependent pathway. In addition, marrow stromal cells from C57BL/6 mice fed a high fat, atherogenic diet failed to undergo osteogenic differentiation in vitro. The ability of MM-LDL to regulate adipogenesis was also assessed. Treatment of M2–10B4 as well as 3T3-L1 preadipocytes with MM-LDL, but not native LDL, promoted adipogenic differentiation in the presence of peroxisome proliferator-activated receptor (PPAR) γ agonist thiazolidinediones, BRL49653 and ciglitizone. Based on promoter-reporter construct experiments, MM-LDL may be acting in part through activating PPARα. These observations suggest that LDL oxidation products promote osteoporotic loss of bone by directing progenitor marrow stromal cells to undergo adipogenic instead of osteogenic differentiation. These data lend support to the “lipid hypothesis of osteoporosis.”