The principal soy phytoestrogen genistein has an array of biological actions. It binds to estrogen receptor (ER) alpha and beta and has ER-mediated estrogenic effects. In addition, it has antiestrogenic effects as well as non-ER-mediated effects such as inhibition of tyrosine kinase. Because of its complex biological actions, the molecular mechanisms of action of genistein are poorly understood. Here we show that genistein dose-dependently increases estrogenic transcriptional activity in mesenchymal progenitor cells, but its biological effects on osteogenesis and adipogenesis are different. At low concentrations (< or =1 microm), genistein acts as estrogen, stimulating osteogenesis and inhibiting adipogenesis. At high concentrations (>1 microm), however, genistein acts as a ligand of PPARgamma, leading to up-regulation of adipogenesis and down-regulation of osteogenesis. Transfection experiments show that activation of PPARgamma by genistein at the micromolar concentrations down-regulates its estrogenic transcriptional activity, while activation of ERalpha or ERbeta by genistein down-regulates PPARgamma transcriptional activity. Genistein concurrently activates two different transcriptional factors, ERs and PPARgamma, which have opposite effects on osteogenesis or adipogenesis. As a result, the balance between activated ERs and PPARgamma determines the biological effects of genistein on osteogenesis and adipogenesis. Our findings may explain distinct effects of genistein in different tissues.