Human bone marrow mesenchymal stem cells (MSCs) are pleiotrophic cells that differentiate to either adipocytes or osteoblasts as a result of crosstalk by specific signaling pathways including heme oxygenase (HO)-1/-2 expression. We examined the effect of inducers of HO-1 expression and inhibitors of HO activity on MSC differentiation to the osteoblast and following high glucose exposure. MSC cultured in osteogenic medium increased expression of osteonectin, Runt-related transcription factor 2 (RUNX-2), osteocalcin, and alkaline phosphatase. HO-1 expression during differentiation was initially decreased and then followed by a rebound increase after 15 days of culture. Additionally, the effect of HO-1 on osteoblasts appears different to that seen in adipocyte stem cells. On addition of a cobalt compound, the resultant induction of HO-1 decreases adipogenesis. Moreover, glucose (30 mM) inhibited osteoblast differentiation, as evidenced by decreased bone morphogenetic protein (BMP)-2, osteonectin, osteocalcin, and osteoprotegerin (OPG). In contrast, MSC-derived adipocytes were increased by glucose. Increased HO-1 expression increased the levels of osteonectin, OPG, and BMP-2. Inhibition of HO activity prevented the increase in osteonectin and potentiated the decrease of osteocalcin and OPG in cells exposed to high glucose levels. Furthermore, targeting HO-1 expression increased pAMPK and endothelial nitric oxide synthase (eNOS) and restored osteoblastic markers. Our findings suggest that targeting HO-1 gene expression attenuates the hyperglycemia-mediated decrease in MSC-derived osteoblast differentiation. Finally, the mechanism underlying the HO-1-specific cell effect on osteoblasts and adipocytes is yet to be explored. Thus, the targeting of HO-1 gene expression presents a portal to increase osteoblast function and differentiation and attenuate osteoporosis by promoting bone formation.