Epidemiological studies show that maternal obesity during intrauterine and early postnatal life increases the risk of low bone mass and fracture later in life. Here, we show that bone development is inhibited in gestational embryonic day 18.5 (E18.5) embryos from rat dams made obese by feeding a high-fat diet (HFD). Moreover, fetal rat osteogenic calvarial cells (FOCCs) from these obese dams have significantly less potential to develop into mature osteoblasts compared to cells from AIN-93G diet-fed controls. Profiling of transcriptional genes for osteogenesis revealed a profound decrease in the homeodomain-containing factor A10 (HoxA10) in FOCCs from fetuses of HFD-induced obese dams. Significant methylation of the HoxA10 promoter was found in those FOCCs, as well as in mouse ST2 cells treated with a mixture of free fatty acids similar to that found in serum from HFD-induced obese rats. This was accompanied by lower expression of osteogenic markers, but higher levels of PPARγ. Control FOCCs depleted of the HoxA10 gene (shRNA) ex vivo behave similarly to cells from fetuses of obese dams; conversely, overexpression of HoxA10 gene in FOCCs from HFD rats exhibit the same phenotype as controls. Treatment of FOCCs from control rats or of ST2 cells with an artificial mixture of free fatty acids significantly down-regulated HoxA10 protein expression, and cells exhibited adipocyte-like properties. These results suggest that maternal obesity impairs fetal skeletal development through down-regulation of the HoxA10 gene, which may lead to an increase in the prevalence of low bone mass in the offspring later in life.