CCAAT/enhancer binding protein (C/EBP) homologous protein (CHOP/DDIT3), a member of the C/EBP family of transcription factors, plays a role in cell survival and differentiation. CHOP/DDIT3 binds to C/EBPs to form heterodimers that do not bind to consensus Cebp sequences, acting as a dominant-negative inhibitor. CHOP/DDIT3 blocks adipogenesis, and we postulated it could induce osteoblastogenesis. We investigated the effects of constitutive CHOP/DDIT3 overexpression in murine ST-2 stromal cells transduced with retroviral vectors. ST-2 cells differentiated toward osteoblasts, and CHOP/DDIT3 accelerated and enhanced the appearance of mineralized nodules, and the expression of osteocalcin and alkaline phosphatase mRNAs, particularly in the presence of bone morphogenetic protein-2. CHOP/DDIT3 overexpression opposed adipogenesis, and did not cause substantial changes in cell number. CHOP/DDIT3 overexpression did not modify C/EBPalpha or -beta mRNA levels but decreased C/EBPdelta after 24 d of culture. Electrophoretic mobility shift and supershift assays demonstrated that overexpression of CHOP/DDIT3 decreased the binding of C/EBPs to their consensus sequence by interacting with C/EBPalpha and -beta, confirming its dominant-negative role. In addition, CHOP/DDIT3 enhanced bone morphogenetic protein-2/Smad signaling. In conclusion, CHOP/DDIT3 enhances osteoblastic differentiation of stromal cells, in part by interacting with C/EBPalpha and -beta and also by enhancing Smad signaling.