Vascular disruption following bony injury results in a hypoxic gradient within the wound microenvironment. Nevertheless, the effects of low oxygen tension on osteogenic precursors remain to be fully elucidated. In the present study, we investigated in vitro osteoblast and mesenchymal stem cell differentiation following exposure to 21% O(2) (ambient oxygen), 2% O(2) (hypoxia), and <0.02% O(2) (anoxia). Hypoxia had little effect on osteogenic differentiation. In contrast, short-term anoxic treatment of primary osteoblasts and mesenchymal precursors inhibited in vitro bone nodule formation and extracellular calcium deposition. Cell viability assays revealed that this effect was not caused by immediate or delayed cell death. Microarray profiling implicated down-regulation of the key osteogenic transcription factor Runx2 as a potential mechanism for the anoxic inhibition of differentiation. Subsequent analysis revealed not only a short-term differential regulation of Runx2 and its targets by anoxia and hypoxia, but a long-term inhibition of Runx2 transcriptional and protein levels after only 12-24 h of anoxic insult. Furthermore, we present evidence that Runx2 inhibition may, at least in part, be because of anoxic repression of BMP2, and that restoring Runx2 levels during anoxia by pretreatment with recombinant BMP2 rescued the anoxic inhibition of differentiation. Taken together, our findings indicate that brief exposure to anoxia (but not 2% hypoxia) down-regulated BMP2 and Runx2 expression, thus inhibiting critical steps in the osteogenic differentiation of pluripotent mesenchymal precursors and committed osteoblasts.