Rosiglitazone (RSG) is a potent drug used in the treatment of insulin resistance; however, it is associated with marked skeletal toxicity. RSG-induced osteoporosis may contribute to the promotion of adipogenic differentiation at the expense of osteogenic differentiation in bone marrow stromal cells. The aim of this study was to investigate whether RSG-induced bone toxicity can be reversed by combined treatment with all-trans retinoic acid (ATRA). We examined different osteogenic markers in mouse embryonic fibroblasts (MEFs) following treatment with RSG, ATRA, or RSG and ATRA in combination. We examined the effects of RSG and/or ATRA on ectopic bone formation, and dissected the possible molecular mechanisms underlying this process. We found that ATRA or RSG both induced alkaline phosphatase (ALP) activity in the MEFs, and that the ATRA-induced ALP activity was enhanced by RSG and vice versa. However, only the combination of RSG and ATRA increased the expression of osteopontin and osteocalcin, promoted matrix mineralization, and induced ectopic ossification in MEFs. Mechanistically, we found that the osteogenic differentiation induced by the combination of RSG and ATRA may be mediated partly by suppressing RSG-induced adipogenic differentiation and activating bone morphogenetic protein (BMP)/Smad signaling. On the whole, our findings demonstrate that RSG in combination with ATRA promotes the commitment of MEFs to the osteoblast lineage. Thus, the combination of these two agents may prove to be a promising and novel therapeutic regimen for insulin resistance without skeletal toxicity. It may also be a better strategy with which to prevent RSG-induced osteoporosis.